Am I alone in having had to cancel a policy due to selling my motorhome and then getting stuffed by the insurance company? I had been insured with "Insurance Choice" and Highway as the underwriter, on cancellation, I received no refund! Highway offered 10% of the premium as policy was limited mileage, so £34.90 from the £251 of my premium still left after just 103 days of cover. this was promptly taken by Insurance choice as a cancellation fee. So, is this a common practice? does anyone have simliar experiences? is there anything one can do about it?
looks to me like an insurance version of ' whats yours is ours and whats ours is our own', you could try the ombudsman but my guess is you'd still end up out of pocket one way or another.
------------- no tin tent outings booked as yet ,just another cruise in Sept' booked so far
Thanks for your input, I have written to MMM and also filed a complaint with IC but hold out little hope. I am not sure if such a practice is widely known? i am sure insurance companies will argue that it's what they do to keep the premiums down and candidly for a 3.8t Merc 2.7 Geist 7mtr long motor home it was a good deal, but only if you did not need to cancel
The deal is agreed to on the basis of a years cover. If the insurer can apply "short period rates" in the event of earlier cancellation, it should be set out in the policy. What does it say?
------------- Mike
My advice is worth no more than the price paid for it
So Highway is the insurer, and Insurance choice an agent/broker?
The insurer offered a 10% refund (not sure how £34.90 is 10% of £251?), but the agent kept it as an "admin" fee?
This should be set out in the documentation. Did you pay the annual premium in full in one go, or use some sort of interest bearing instalment facility?
------------- Mike
My advice is worth no more than the price paid for it
Look in the 'Terms and Conditions' of your insurance policy as that's where you will find the information you need as different insurances have different policies so no accurate advice can really be offered on here other than what steps to take. In the terms and conditions it always states details regarding any cancellation fee but this depends on the period of time in question as again it can differ accordingly with different policies. If however there is nothing in the policy or if it is not clearly described then you have a case against the insurance company so if it's in black and white then you have to accept the ruling otherwise if it's not then this is the time to make your complaint in writing to the financial ombudsman.
I did something similar when I cancelled my MH policy after one month as I sold the vehicle. At first they said I wasn't entitled to a refund at all. I went and checked the T&C's and found that I was, phoned back and read them the relevant clause. After the challenge, they agreed, but I still ended up with only about £26 back - after they charged a whopping cancellation fee. It was the most expensive month's vehicle insurance I ever had!
Most insurance companies stipulate that they give no refunds in the first year. Given that motor insurance policies generally only run for a year, I take that to read that they won't give any refunds at all.
Quote: Originally posted by MIGLIO2 on 10/1/2013
Annual premium in one go, annual premium was £349, hence £34.90. £251 was rssidual cover after 103 days.
Right, with you. The annual premium is £349, paid in full up front, and you cancel after 103 days. On a strict pro-rata basis you would have "used" up 103/365, or £98, leaving an "unused" £251.
Despite this, the insurers only refund £34.90, via the agent, who keeps it as an "admin fee".
There's a couple of aspects to this. As I mentioned before, they did the deal assuming they'd be providing a years cover, for which they'd have the benefit of a years premium. The costs of obtaining the business and servicing it assume that to be the case.
Nevertheless, it's normal for this sort of insurance to include provision for cancellation by the policyholder mid-term, and in certain circumstances, by the insurer.
The policy should set out the details of that provision, and how the question of the unexpired premium would then be dealt with. In my day in the industry it was common for the wording to say that if the insurer cancelled - depending on the circumstances - they'd refund the premium in full, or refund the unexpired premium on a strict pro-rata basis, i.e. 1/365 for each unused day.
If the policyholder cancelled after the first year, then it was common for a full pro-rata refund to be given. If it was the first year however, the premium retained (which is what determines the premium refunded) would be calculated on what used to be called a "short-period" basis.
For the cover actually *used*, that had the effect of retaining more of the premium paid (and in turn, refunding less) than the pro-rata approach. This was so that the acquisition and servicing costs would be covered, especially in the first year of policy issue.
I expect this is what is happening here, albeit with a formula which is much more severe than it used to be in my day.
The crucial point though is that all this should be set out in the contract, and if it isn't, that would add argument in your complaint submission to the FSA, or whatever the body is these days. Have you read the policy and the sales documentation to check this?
The other aspect then is the agent's admin fee practice. Again, back in the day, agents didn't charge fees for general insurance placings - they received a commission from the insurer. Generally then, it was in the order of 10%. The point is, you could change address, change vehicle, drivers, cancel, whatever, and weren't charged a penny for their help - their costs were funded by their commission.
How different it is now. I don't know whether general insurers still pay commission. I do know agents now charge admin fees, I've had it myself. Again though, their rights (and obligations) should be set out in writing, and be provided at the time the cover was taken out.
Have you nothing from Insurance Choice setting this out? Again, if not, it strengthens the argument.
I do feel that however it's divied up, ending up with a nil return after using less than a third of the insurance year is a tough deal even if the situation is set out in foot high bold font in the policy. I don't know whether there's scope for claiming unfair contract terms even if it was so set out, but it's worth looking in to.
Good luck. I hope you get a fairer outcome here.
------------- Mike
My advice is worth no more than the price paid for it
Just taken out insurance on a second car which will be sold before the year is out. We were told at the outset that a £40 cancellation fee will be payable if we cancel at a later date.Most companies charge this.
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Topic: insurance cancellation BEWARE
