insurance cancellation fee

[meursault]

Hi,

 

I took out vehicle insurance earlier this year through a comparison website. I paid a deposit installments but at no point signed any credit agreements or contracts. They posted me some stuff but I didn't respond in any way. After a few months I sold the vehicle which the policy covered and attempted to cancel the policy. I was informed I would have to pay a cancellation charge which was approx 1/3 of the total annual premium.

 

I objected to this as :

 

(a) it wasn't clearly stated when i took out the policy (buried in terms & conditions - alledgedly).

(b)i thought the amount excessive - I would have agreed to a month's premium as good will but not this which I feel is punative.

©on a personal level I felt it unreasonable to charge for NOT doing something.

 

Anyway, I cancelled the account that they wanted to take the charge out of and left them to it. I have since received letters and phone calls from a "debt recovery company" stating the usual things.

 

I'd like some advice as to how to get rid of the debt recovery firm. I've read a few similar posts which refer to CCA requests (is that the right term?) but I'm thinking this refers to credit agreements which don't apply here? Can I ask them to prove that I owe them anything?

 

Cheers.

[Wulfyn]

This is a common misconception about the way that insurance is sold. Although you can have a policy that runs for any amount of time, you are usually purchasing a year's worth of cover. The monthly installment plan makes it seem like you are buying the cover on a month by month basis, paying for the next month in advance. Thus when cancelling it feels like you should not have to pay anything more because you have paid for what you have used and don't want anymore.

 

The problem is that you will actually have bought a year's worth of cover, and just have the option of paying for it on a month by month basis (usually with a high APR of around 25%). It is like buying a material object like a TV and then paying for it over 12 months.

 

 

I definitely agree with you however that this is not made nearly clear enough when policies are sold. In that sense it is worth complaining to the FSA to try and make such points clear to other in the future (and only mass action like this will force the FSA to look at it and make the change).

 

 

Sadly there is little you can do, as legally the insurance company are within their rights to charge these fees which often amount to you having top pay pretty much the same amount as if you don't cancel the policy and pay the remaining premiums. However you can try to contact the company and complain under their TCF regulations.

 

TCF, which stands for treating customers fairly, is a set of agreements under which all insurance companies have to abide. Sadly there is no standard list of rules - insurance companies have to come up with their own list and then show the FSA that they are abiding by them. In that sense it's pretty loose, but it is pretty powerful.

 

I would phrase the complaint that the lack of transparency of how the product worked when you purchased the monthly installment scheme misled you to believe that you were purchasing the insurance on a month by month basis. State that although you now concede that this was within the terms and conditions you feel that it was not presented clearly enough. thus the company was not acting in a fully transparent way.

 

If you want to ask for a list of the company's TCF guidelines. You should see words like Communication, Integrity, Transparency etc.

 

 

Good luck with this, sadly I think things are against you on this one, but I hope you win because things should be made clearer.