Car Insurance for 17yo

[afcwben]

My 17yo passed his test and took out insurance, down payment £700 and Monthly installments of £310, the first monthly installment went through today. However my son sold the car yesterday as it had a head gasket problem. He rang the insurance company who have said if he wishes to cancel the policy he will lose the £1010 paid in the first month. This cant be right, anyone got any suggestions how to tackle the insurance company, I can pull the DD back if I needed to

[crem]

Is he not buying another car shortly? If so, he should ask the insurance company to suspend his insurance as he is in the process of buying th new one and will let them know the reg number as soon as possible. That way he should be able to avoid any cancellation charges.

[Anonuser]

As above if he is getting another car shortly he can add the new one to that policy. Sometimes it even works out cheaper so the insurance would owe you.

[assisted blonde]

If you cancell insurance they can ask you to pay the whole year if its on DD If you pay monthly the insurance company has already paid out to the firm that underwrites the insurance (at least this is what I was told) usually the insureres will let you suspend while you get a new car.

[Mallrat83]

I work for a leading insurance broker in the UK, so i'm used to dealing with stuff like this.

 

It may be slightly different where I work because we pay the insurance company upfront, and then the customer pays a deposit and then doesnt pay anything for 59 days. This is suggested to the customer as a good thing as they dont have to pay anything for 2 months! Great they say... but what they dont realise is that were only not taking a payment for 59 days because it incurs more interest by us not taking that first direct debit for 2 months as you are paying in arrears. In other words, what we dont say in as many words is that youve taken a loan out with us as such rather than us being helpful by allowing you to pay monthly and your paying your policy in arrears so your always in debt to us.

 

If a customer then calls to cancel the policy after the initial 14 day cooling off period has expired, the insurance company return a pro rata refund to us. This refund will take into consideration a cancellation fee (upto £50) and also no refund given for any upgrades you have added to your policy. This returned premium is then used to lower the outstanding balance on the premium including any interest accrued upto the cancellation date. The outstanding amount is then owed to us by the customer because of those initial 59 days where we didnt take a direct debit.

 

So maybe his insurance company are operating a similar thing, but after reading it again it appears that the initial deposit is just strickly a deposit to set up a loan with his insurance company, and then the first direct debit was to cover him for the month he had on cover with the company so upon cancelling the policy, he would not receive any refund as he had only paid for the time he had on cover with the insurance company anyways.

 

If he is going to be purchasing a new vehicle, with the insurance companies i deal with, they tend to allow 14-21 days where no vehicle is on cover before they request the policy be cancelled. So if he was to refer it to the insurance company or the broker they may be able to advise you how long the cover can remain in place for without actually covering a vehicle before it does need to be cancelled