Confused about cancellation charge- HELP

[jowalshy]

Hi, My boss took out an insurance policy last year for liability insurance. At the time he received several qoutes from different companies and by mistake signed up to the wrong one. Once the error was discovered he cancelled the policy (one month after it started). He now has been receiving letters from a debt collection agency asking for nearly £580.00 for a cancellation fee!!!!. I have tried to get a breakdown of the costs but they just tell me that it is "the fee for cancelling the policy". Surely they can't charge this sort of amount for cancelling a policy.

[xrchris]

I assume payment was arranged via direct debit?

 

A word of warning some Liability Insurance policies do not allow any short term cancellation fee of any kind and the full 12 month premium remains due. Is that is what has happened here?

 

Can you elaborate a bit more as to the circumsatnces etc?

[jowalshy]

yes the payment was arranged to be paid via DD. The actual total cost of the premium was about £1780.00 for the year.

[xrchris]

OK some questions.

Does the £580 include any DCA fees or any other fees or is it just the outstanding premium following cancellation and which insurer was it with? Is it just a standard PL policy or a combined liability or package policy?

[jowalshy]

The DCA fee is only £17.62 !!!!! The rest is the insurance companies "fee for cancellation". The company is Assure UK and was just a bog standard PL policy.

[jowalshy]

I phoned the DCA, who were very unhelpful, I asked for the phone number of Assure Uk and was told that I would have to find that out for myself! I called Assure Uk, but apparently there was noone around to talk to me and that they would get someone to call me back.

[ScarletPimpernel]

Presumably you still have the paperwork for the policy, which should contain all the terms and conditions, so you can check what it says about cancellation.

 

If you haven't, Assure UK have a freephone number - 0800 980 0770 - you could call and ask for a copy of the paperwork.

 

As for the DCAs, inform them (by fax or letter) that because they have failed to provide full details you are unable to confirm whether the money is actually owed, and you will contact them again after you have taken advice.

 

The DCA's contract is with the insurer, not you, so they should look to their client for their fees (unless the policy contract specifically states otherwise).

[wez1211]

check the original quote details. It will probably say somewhere about a minimum retained premium after cancellation within a certain timescale (say 6 months) and it can be expressed as a percentage of original premium.

 

Certainly not a 'time on risk' charge because 1 months premium does not equate to £580 quid.

 

Minimum retained premiums can be common with more unusual risks and where the Insurer is a 'specialist', i.e just doing PL cover etc.

 

Put is down to experience, pay up (if there was no DCA on the case I would say ignore the demand for payment) and use an experienced broker next time - who would have forewarned of the cancellation charge and indeed ensure that you had the right cover in the first place!!

 

wez1211

[Trojan1401]

Jowalshy,

 

When you say your boss signed on for the wrong one, was it due to price alone or infact found that the cover was not suitable and perhaps mis-sold. That would put a different slant on the whole matter.

 

Never heard of Assure UK - are they a broker or underwriter ?

 

In repsect of the comment on minimum charges, I could accept that on say a standard PL policy costing £150 or so such as PL cover for an event or standard one man band tradesman policy but at the above cost, suspect a more "comprehensive" business PL policy. A bit more info may help to explain.

 

I suspect though that your boss has just been ripped off.

[xrchris]

Never heard of Assure UK - are they a broker or underwriter ?

 

 

Assure UK is a trading name of Towergate Underwriting Group Limited.

[Trojan1401]

Says it all then !!!!

[jowalshy]

The policy was for public liability to cover himself and the subcontractors that worked for him. He had a quote from Assure UK and many others. Obviously he decided to go with the cheapest quote, but unfortunately received the details from Assure UK the same time he received the stuff from the company that quoted the cheapest price. In error he signed all the papers from Assure UK and didn't realise until the cheapest company got back to him asking why he hadn't returned their papers. On realising the error he contacted Assure UK and cancelled the policy with them and started up with the cheapest company. He then started receiveng letters from Assure UK asking for money.