Thanks again for your help. We made a complaint over the phone (which they said was the first step before writing, however I think they just didnt want it recorded as an official complaint) (I was planning to follow it up with a letter) when yesterday afternoon we got a call from the claims executive who basically apologised that we had to complain and that we were right. He didnt understand why the agent had told us otherwise and offered to half the cancellation fee to £30. Had it been me speaking to them I would have asked what action they are taking to prevent it happening to another customer. It could have caused us a huge loss of money, not to mention the strain and worry of it all. Looks like its all sorted now. Again, thank you for your advice.

Thank you for your help. We have logged a formal complaint. At renewal time we were not made aware that the previous years claim would be subject to the previous years term, had this been made clear we would not have renewed knowing we were going to sell the car and cancel the policy.

They havn't misread the claims info as they clearly stated on the phone that as she renewed with them there is nothing she can do.

Not sure where to start with this.. The girlfriend had an accident in Oct 2012, it was a full payout (£1000) as the car was a write off. The insurance premium was renewed for 12 months in January 2013 on a direct debit. Now my girlfriend has gone to cancel they are asking for the full premium. Due to accident they are saying the claim is not settled and they basically want her to pay up so that they can recoup the costs. The wording in the policy states: "If any accidents have arisen which may result in a claim we will not refund any premium and, if you are paying by installments, you must still pay us the balance of the full annual premium." Sureley with her renewing the contract in Jan 2013 this should have no bearing on last years policy. She has not claimed since renewing in January. They have even said that even when the accident is fully settled and she still wishes to cancel they will still request the full years premium. Any help? It seems wrong what they are doing, I would understand if it was still within the year the claim/policy was made, but its not.