£317.60 Mid term Adjustment charge, can't be right?

[travisbickle]

Hi, recently i had a car insurance policy and could not to afford the already expensive installments so i cancelled the policy. At the beginning I started a policy believing i had 5+ years no claims bonus, but after asking for proof of this my last insurer told me i only had 1 year as my no claims wasnt protected and basically i lost 8 years ncd when my car was stolen. I informed my new insurer, asdaonlineexclusive, when i found this out and they adjusted my premium and installments.

 

Having to pay £200 each month was just too much so i cancelled after being on the policy for 3 months. At this stage i worked out that i had payed roughly £818 of the full years premium which was £1960. Basically i had overpaid around £250-300. I informed them of this and they said they would tell me how much i was due within 30 days, 5 weeks later after contacting them twice again they have told me there is a £75 cancellation fee which i knew about but also Mid Term Adjustment at £317.60. They actually said in the email i owe them £32...

 

Please can someone tell me there is something i can do about this, there is no way adjusting an insurance policy can cost over £300 with all the other charges and the fact i made no claim and the policy is over. I mean really what do they do to earn this money?

 

Are there some rules or regulations that allow them to do this or is there some help for me?

 

Thanks

 

Andrew

[unclebulgaria67]

Ask them for a full breakdown of the calculation to be made in writing. This is your right under FSA rules.

 

It is possible they are correct, as if you cancel mid-term they calculate on a different basis, as set out in your policy. i.e you effectively pay short term rates, plus a cancellation fee.

[travisbickle]

This is what they said in the email i got:

 

Total Paid= £708.03

 

Deductions= £75 Cancellation fee, £27.50 Direct Debit administration fee, £320.76 for time on cover, £317.60 for Mid-Term Adjustment

 

This leaves an additional premium of £32.83, therefore no refund is due.

 

 

The total paid is i believe for the policy after adjustment, i paid £150 on the initial policy prior to this. Is this a full breakdown or should i ask precisely how they come to £317.60 for mid term adjustment?

 

Thanks

 

Andrew

[unclebulgaria67]

Just ask for a full breakdown of the Insurance from start date to cancellation date, not just a summary as provided.

 

They should have the information available to them.

 

It is not unknown for mistakes to be found when they start doing a manual calculation.

[Wulfyn]

Unclebulgaria is right - it is common practice for this mistake to happen. Even on computer systems it can be notoriously fiddly to work out the correct rate to be charged at MTA.

 

It seems to be however that your MTA was the ammendment of your NCD from 5 years to 1 year? It is possible for this to cause a large premium increase from what you were quoted. If the full year's premium was £1,960, and the %age difference between 1 year and 5 years were, say, 20% then that would result in an approximate price difference of £400 between 1 year and 5 years NCD.

[travisbickle]

It seems to be however that your MTA was the ammendment of your NCD from 5 years to 1 year? It is possible for this to cause a large premium increase from what you were quoted. If the full year's premium was £1,960, and the %age difference between 1 year and 5 years were, say, 20% then that would result in an approximate price difference of £400 between 1 year and 5 years NCD.

 

 

When the adjustment was made i paid an extra premium and my monthly installments went up from £94 to £190. I assumed all extra costs for the MTA would be included in that.

 

I emailed again asking for a breakdown of costs etc, but they still didnt send one but said:

 

"I can confirm that the mid term adjustment amount of £317.76 is a result of the amendment from 5 or more years No Claims Discount (NCD) to 1 year NCD. This amount also includes the 20% non-disclosure fee as per our Terms of Business which was also added to the deduction amount. "

 

From terms of Business: -

 

'If when you provide your proof of NCD to us we identify discrepancies and/or non-disclosures which do not correspond to the information you have provided online when you purchased your policy, we will apply the correct additional premium. Where we apply the correct additional premium, a 20% non-disclosure administration fee is payable, subject to a minimum fee of £35.'

 

Now if after a month of the initial policy they made the mid term adjustment and i paid an additional premium then continued to pay the increased installment payments doeasn't that mean i have paid any MTA in the premium?

 

Also the reason i told them i had 5+ years ncd at the beginning was because that is what my previous insurance broker told me.

 

Getting more confused.

 

Thanks for help

 

Andrew

[Wulfyn]

Yes, this is confusing!

 

You need to ask for a full breakdown of the money owed, detailing:

 

Annual Premium payable

Time on cover premium payable

Any administration charges

Any fees

 

 

Forget all this rubbish they are saying about MTA. This is not an MTA as you have not changed anything. An MTA would be like where you move house or change car half way through the year. What you have is an ammendment to your policy, which will count from the date of inception and not mid term (unless they are letting you get a cheaper price up until the point they found out!).

 

Therefore it should be easy for them to state what your annual premium would have been with the correct information. From that you can use annual premium * %age of the year plicy was in force to work out your time on cover charge. To this add the administration charge for the ammendment to your policy, and the cancellation fee, and any other fees they applied. That will give you the total amount you owe. From this you can deduct the money you have already sent them.

 

Depending on how much your premium increased they may be right that they don't owe you anything, but you have a right to be given the information in a manner in which you are able to understand. TCF rules prohibit them from trying to confuse you.

 

 

If they do not provide a breakdown in that manner within the next 7 days I would writ a letter of complaint to them about their inability to properly explain what they are charging you for, and that you expect a breakdown within 14 days or you will seek to resolve the matter through the FOS. If a reply does not have that, if it has ANY excuse whatsoever then take this as their final response and complain to the FOS. State to the FOS that you believe that the insurance company are trying to extort money from you by not providing you with the information requested in a manner that they would expect you to understand.

[travisbickle]

Ok they got back to me still with no full breakdown, but i can see they are correct.

 

Of the £820 i paid 15% went to finance APR

Also there is a 20% non-disclosure fee because i recieved incorrect information about how many years ncd i had. I think that means 20% of full year (£1900)

Cancellation fee £75

Direct Debit charge £27

Mid Term Adjustment probably cost £20 or something.

 

So yeah i paid £820 for 3 months of car insurance where i made no claim.... 2 years ago i only paid £400 for the full year....oh well i guess this is how some people like to make their money.

 

Thanks for replies