cancelling car insurance (ipswich insurance)

[razorc]

hi wonder if anyone can help me , i took out car insurance and paid it monthly , but cancelled it 7 months into it , phoned them up to cancel it i was told i would need to pay the rest of the year's premium , i said no as i didnt need it anymore

 

but was told i had to pay £160 to clear it . I refuse to pay it and ended up with CCJ for £197

 

 

can they make you pay the rest of the year's premium if cancelled serveral months into if you pay it in monthly instalments

 

no claim was made on my policy

[Trojan1401]

Hi RazorC,

 

Please read your policy carefully.

 

Generally under a personal lines policy there will be a cancellation clause. If this was the first year of the policy then short period rates would apply which are usually based on a percentage of the annual premium.

 

If as it appears, you entered the 8th month then I'm afraid the full premium is due. This is standard across the industry.

 

Under FSA guidelines, when you took out the policy, the documentation & policy itself should show the cancellation guidelines.

 

I'm afraid they are correct.

[Rob S]

It has amused for me such a long time that the motor insurance companies can operate in such a way. This amusement was heightened when I moved house in March and cancelled my home contents insurance. I was paying by monthly instalments and all I had to do was cancel my direct debit and inform the insurance company of the cancellation of the policy. There was no demand for me to pay short term rates in the way the motor insurers do. My partner had an identical experience when she cancelled her home contents policy. The question that has to be asked is if the home contents insurers allow a cancellation midterm and are happy to apply pro rata rates then why can't the motor insurers?

[razorc]

feckers thats all i can say , thanks for the info from both of you's , its a disgrace that companies can away with this crap when cancelling , what if it was them who cancelled it due to late payment , would the feckers stil chase you for the remaining months due on it

 

probs yes a take it

[dave]

The difference is that motor policies are issued for a full year (under law), so if you paid by direct debit and only paid say the first month - you are still covered (up to the minumum requirements of the law) by the insurance company for the rest of that policy year.

 

Wheras home insurance is not bound by the law - it's your choice (or in the case of buildings insurance your mortgage companies choice), wheras motor insurance isn't your choice and is compulsory.

 

It's crap I agree, but that's the reason, because they HAVE to insure you for a full 12 month once you have entered into the contract, they are legally allowed to charge for it, even if you cancel. Even a cancelled policy is in force to the minumum of the law until the year is up.

[razorc]

thnak Dave for your info , i phoned them up and have decided to pay it , they said they would update my credit file saying its paid when i pay it back

[ReallyHadEnough]

The difference is that motor policies are issued for a full year (under law), so if you paid by direct debit and only paid say the first month - you are still covered (up to the minumum requirements of the law) by the insurance company for the rest of that policy year.

 

Its this correct?

[patdavies]

Its this correct?

 

Nope.

 

You can arrange insurance for any period you like; normally 1 year.

 

If the law required any policy to be valid for 1 year, how can day insurance even exist?

 

There is no legal minimum term.

 

Dave, if you believe otherwise, please post reference to the relevant Act.

[Wulfyn]

What's important to realise, and not immediately or clearly apparent, is that the payment length (annually or monthly) is not related to the cover. The standard is to purchase 1 year's worth of cover. So if you choose to pay by monthly installments don't think of it as paying on a month by month basis for your cover, think of it as taking out a finance agreement / loan on the insurance premium, and then paying that loan back. This is why you pay more when you pay monthly (as you'll probably be paying around 25% APR on the loan).

 

 

The reason why it is done this way is a mixture of history (imagine having to buy new insurance every month before computers were mainstream) and IT limitations (insurance industry computer systems tend to be archaic as they are expensive to replace, and the broker distrubution channel is supported by a very antiquated system where insurers send their rates using a special software system called Polaris (etc) to Software Houses, who then build computer programs that they send to brokers who use these to generate premiums from information you give them). Believe me, working with this is frustrating as hell.

 

 

Insurance can be sold over different periods of time (1 day cover for special events, 7 day cover when you buy a new car, or even multi-year policies), and I'm sure one day some clever people will one day convince their company directors to sell monthly rolling cover. Norwich Union's pay as you drive was an attempt to break this format, but they could not get enough customers and dropped the scheme.

 

 

 

In response to the OP:

You can have multiple insurance covers on the same item legally. Often if you want to cancel your cover it is cheaper to switch it (say to fire and theft only) and then let the policy lapse, whilst taking out cheaper cover elsewhere. If you do have multiple covers just make sure that if you have to make a claim then you don't claim on both policies without telling both insurers you have done so, or it is fraud (you can however claim on both policies and get each insurer to cover half of the total cost, you just can't get eah to pay the full amount).

 

 

An alternate route if you no longer own the vehicle is to contact the insurer and tell them that they can no longer cover the vehicle because it is not an insurable interest of yours. Insurance companies can be a lot friendlier if they know the reason why you want to cancel is because they will not be losing business to another company. What they hate is the idea you can find a quote somewhere else for £10 cheaper and switch over, but you can't switch if you no longer have a car to insure, and by treating you well they are more likely to get you to come back when you have a new car.

 

 

What's really **** about all this is that if you know what to ask for you can usually get a satisfactory result. There are plenty of decent people as well as assholes that work for insurance companies. Problem is that unless you know how it works you don't know what to sk for (but I guess this is why this forum exists).

[cityfan]

Wulfyn is pretty much right here, but there seems to be a couple of re-curring issues on this forum regarding car insurance which no-one has covered.

 

1.Cancellation. You HAVE to do this in writing and return your certificate before your policy IS ACTUALLY cancelled. This is because technically the insurance company could still be liable to pay out if you hit someone, and can't prove the policy was cancelled. People will try anything when they're on the ropes, "no, I never called you, that must have been someone else etc. ", which is why an insurance co. has to be compliant. Usually, in cases of non payment, they will issue a written 7 day notice of cancellation by recorded delivery.

 

2.If you pay by DD there is often a 3rd party involved, the premium finance company. They pay the insurance up front to the insurance co. or the broker, and then collect the payments from you. If the insurance company or broker do not return any refunded premium to the premium finance people, then the debt is still outstanding with them, and it can take some time for the premium to go back to them. And it's not unknown for some parties to pocket the return, and leave the client debt with the premium finance co.