Hi,

I have read a few of the other threads on auto renewal and I think I understand my position but just wanted a little bit of clarity on my particular problem...

Budget Home Insurance was up for renewal on September 20th I don't remember getting a reminder (I have since found the reminder and am blaming my wife or old age...)

Next thing I remember I get a letter around October 7th informing me that they cannot take money from my credit card to pay the premium, so I check their premium against others on the web: Budget premium is £600, the cheapest premium I find is £200. I take out the £200 policy.

I stupidly don't bother to contact Budget as I think, "I don't need their insurance and they haven't taken any money so everything is fine!" I now get a letter cancelling the insurance and a bill for £200, I phone Budget and they say that since they have been insuring me up to cancellation this is what I owe for the service so far.

Question 1: Since they never took any money and I never recieved an insurance pack saying I was insured then surely I was not insured?

Question 2: Are there any other reasonable options open to me other than paying the £200? (This is the same amount as my entire yearly premium from a competitive insurer and pretty much what I payed last year. They effectively tripled the premium with the auto renewal!)

I know this has been covered many times before and I have read the threads but thank you in advance for any advice that could help me save some of this £200 (it is still cheaper than taking out the insurance!)

Al

You had an agreement with Budget to provide 1 year of cover, you paid for that, you got that.

Budget may well have an auto renewal built into their policy, however if they were unable to take payment then the onus is on them to find out why (ie cancelled direct debit, old credit card details etc).

Since the old policy 'lapsed' at renewal date and you did not ask for further insurance then I fail to see why they can charge you for something you didn't want and didn't ask for.

I'd ring them up, tell them insurance was not required after the renewal date and that's the End of.

Mossy

Well it seems that auto renewal means that I agreed to renewal if I did not respond (I think it was in the terms and conditions of the initial insurance agreement that I took out).

I talked to Budget and suggested that as their renewal premium was nearly 3 times the original premium and the cancellation fee (£200) was as much as a full years premium from the insurer that I eventually used that smacks of profiteering. This line of argument did not work.

I never heard back from them for a while but now the debt collectors are calling me, I guess I have to pay up?

I guess I have to pay up?

Hell no.

If they never took money from your account, and you never received an insurance certificate then you are in a very strong position to say that you were not covered, no matter what Budget might say. Otherwise it's like me promising to send you a book through the post if you pay me money, and then harassing you for the money.

The auto renewal system can be a great time saver or a bane, and everyone will have their own views. Insurance companies like to have people renewal this way as it saves them money, and often pass on around a 10% to 20% discount to the customer. Of course the rating that they apply to the risk of your insurance cover can change over a year, and this can mean that people like you get caught out by heavily inflated premiums.

The auto renewal system is an agreement that the policy MAY automatically go into effect for the following year, unless either side decides to cancel. Note the word 'MAY' above, because it's very important. This condition is like the boots meal deal "buy 5 in one month and you MAY get a 6th one free' - if you don't go to claim the 6th mean they're not going to post it to you are they? Similarly if the insurance company does not process the renewal correctly, and by this I mean they send you a certificate of cover, then you are not obliged to stick with them.

I would contact Budget to say that they did not choose to renew the insurance, which was indicated to you by them not sending out a new certificate of insurance. Because of this you decided to take up cover from elsewhere. As Budget have failed to renew your policy they are not entitled to any money from you. State that you consider the presence of a debt collection agency as harassment for a payment when no service was provided. Demand an apology (a great way to get the other side to admit you are right for future proof), and state that if you do not hear back from them within the next 14 days then you will make a complaint to the FSA.

Send this to their complaints department (or even better their customer services director if you can get the contact details). Keep any talk of premiums out of the conversation - it is entirely beside the point for you as you are arguing the technicality that cover was never provided (at any price).

If the debt collection agency contacts you again state that Budget have not provided you with a service, and that you have made a complaint to Budget over this. Refuse to give them any other details at all, and once you have said your bit hang up the phone (thanks to other members of CAG for this advice). Write this down and keep it by your telephone so you can read from it directly and you won't get flustered if it happens.

I don't like to make guarantees, but I can all but guarantee that if this were to ever go to court it would be seen in your favour.