Hi all

I am writing on behalf of a friend and colleague who has got himself in a bit of trouble over his car insurance. While I am better at communicating arguments for him I do not know the ins and outs of the relevant regulation so thought I might ask for your input.

Basically, he pays for his insurance monthly, using a credit agreement with a third party. He missed his August payment (well, his bank cancelled the DD without asking) and got a letter a couple of days later (dated 17th) saying he had to make payment by 2nd September latest. He was not at that address at the time and so did not get the letter until the 3rd, when he called them and was told it was too late and to contact his insurer. His insurer told him to wait for a letter. He then got a confirmation today that his policy will be cancelled - with just 4 days notice. The finance company consider all dealings closed as they got a refund from the insurer.

Questions:

- Was 14 days enough notice for him to make a payment?

- Is 4 days enough notice to cancel the insurance?

- What's the best way to deal with this with the priority being not to lose cover (he needs his car to get to work and cannot afford a new annual policy at this time)?

Advice hugely appreciated

Dom

They have to give a minimum of 7 days notice before cancellation. Most Insurers would issue a couple of letters, before they cancelled. If you have a look at the credit agreement and policy wording regarding cancellation, this should confirm the Insurers procedure, which you can quote back to them.

Normally, you are able to phone the Insurers to make the missed payment, by using a debit card and then reinstate a Direct Debit. Most Insurers will set up a new Direct Debit arrangement over the phone.

If the Insurers cancelled without providing the minimum 7 days notice, then if they ask for cancellation charges, this would not be seen as fair.

Under normal circunstances, yes - but this was a credit agreement, and the terms will probably have stipulated that in the event of any missed/delayed/rejected payment, the policy will lapse. So as to ensure the policyholder is not caught unawares, they cancellation of cover is not instant, but usually seven days FROM THE RELEVANT PAYMENT DATE. The finance house wrote requiring payment to be made within 2 weeks, the fact he was not theire to receive and resolve the issue isn't relevant unfortnately. With the second payment date missed, the finance house will tell the insurer and recall the payment, which results in the insurer cancelling cover.

Depending on how it was done, and how far he was into the arrangement will depend on whether he will be asked to pay additionally for the difference in cost between the inception of the cover and the date of termination. If more than the amount paid, they will probably request payment of the difference.

It is very difficult to argue foul in these circumstances, as the onus is on the customer to ensure the payment is made on the due date as agreed. If the bank rejected the request, complain to them - but without a regular payment, there is no obligation to provide cover.

id start at the bank & find out why THEY cancelled the DD.They have put you in this predicament,once they realised their error they should have reinstated the DD mandat

I agree with vusys. If the bank caused the problem, then they should put your colleague back in the position he would have been in, had the payment been made. If it really wasn't your colleagues fault, that is the line I would pursue.

HB