Motor insurance cancellation fees

[woad]

I cancelled a policy after selling a car a few months ago. I was surprised to find I had to pay a £200 administration fee to cancel the policy! (It's bad enough having to pay £25 just to amend address details)

 

Is this fair, or are insurance companies bound by the same regulations as finance companies in that administration costs must be a fair reflection of their costs, and if so, how would one challenge this and try to claim back the fee?

[unclebulgaria67]

Yes it is the same that the fees must relate to costs as that is the reason given by the Insurance companies i.e to cover their costs.

 

You are entitled to ask for a full breakdown of the amount they have indicated and to request that the amount is not charged to you until they have given you opportunity to check the breakdown.

 

If you meet any resistance make a formal complaint and indicate that you will be asking the FOS for a review.

 

Nb. Cancellation fees are normally in the £40 - £75 range. The rest could be what the Insurers can charge for the cover they have provided. If you took out legal cover or any options, you will have to pay the full years amount for those, even though you have only had part of the year. There may be charges related to the actual cover. You need a full breakdown, so you can see.

[woad]

Cheers UB

 

Edit: for some reason I can't see the "thanks" icon... Either it no longer used or it's the iPad... But thanks anyway

[gordieglqasg]

Have you had an accident / claim during the policy year? If so and you were paying monthly then the insurance company will be able to claim the annual policy cost off you. If however this is an 'administration' or straight 'cancellation' fee it does seem excessive.

[woad]

No accident or claim. Just a fee for cancelling cover after selling the vehicle, seven months or so into a renewed policy. And still awaiting the proof of NCD...

[gordieglqasg]

As unclebulgaria said do you have any extras on your policy - legal assistance, breakdown cover etc that you may have used? IC's will usually look to recover these as they will have paid out in full to a third party provider.

 

Insurance companies shouldnt withhold your NCD proof (or use it as a bargaining tool) you own it! (unless it is tied to a specific clause in your insurance i.e 2nd driver NCD etc). Get your new insurer to call them directly to confirm it.