Insurance after collision

[Nibbles_bits]

I'm after some advice because I've not had any experience with this.

Last month my daughter had an at fault accident with her car being written off.
The Ins Co have now paid out on the car.

From my daughter - the insurance company have said that if she cancels the policy now, she will have to pay the remaining annual premium of 11 months (or continue to pay monthly for the duration of the policy, without a car!?)
Anyone experienced this before?

Daughter has been told "any future car can be added to the policy and the premiums adjusted accordingly".
So it 'appears' that she's now "trapped" with this Ins Co.
- pay £280 a month, but no car.
- pay whatever premium they decide on for the new car, even if it's cheaper elsewhere.

I've not read the Ts&Cs and I doubt daughter has either.
-

[InitialDave]

Her policy was ~£3300 a year? Am I understanding that correctly?

[Billy Eyelash]

Nibbles_bits said:

I'm after some advice because I've not had any experience with this.

Last month my daughter had an at fault accident with her car being written off.
The Ins Co have now paid out on the car.

From my daughter - the insurance company have said that if she cancels the policy now, she will have to pay the remaining annual premium of 11 months (or continue to pay monthly for the duration of the policy, without a car!?)
Anyone experienced this before?

Daughter has been told "any future car can be added to the policy and the premiums adjusted accordingly".
So it 'appears' that she's now "trapped" with this Ins Co.
- pay £280 a month, but no car.
- pay whatever premium they decide on for the new car, even if it's cheaper elsewhere.

I've not read the Ts&Cs and I doubt daughter has either.
-

That's normal with monthly payments. She hasn't yet paid the full cost of the policy.

[Yellow Lizud]

When you buy insurance you buy it for the whole year. It is an annual policy. It makes no difference that you are paying by monthly instalments. The whole premium has to paid.

The initial premium was calculated on the chance of you making a claim within the next year. It makes no difference if the claim is in the first month or the last, that is the premium that needs to be paid

[Nibbles_bits]

Thanks for the quick replies.

I ask because in my experience, my policy was cancelled after my pay out.

[InitialDave]

Nibbles_bits said:

Thanks for the quick replies.

I ask because in my experience, my policy was cancelled after my pay out.

Had you paid for it?

[Nibbles_bits]

Nah, monthly.

[darreni]

Nibbles_bits said:

Nah, monthly.

The outstanding premium will have been deducted from the final settlement.

[Solocle]

darreni said:

The outstanding premium will have been deducted from the final settlement.

Unlikely, if they terminate the policy early I'm pretty sure you get a pro-rated refund. That'll probably end up the default if you don't switch the policy to a new car.

Contact the insurance co. about your options, and your policy document is your friend.

Edited by Solocle on Thursday 5th December 12:25

[Jamescrs]

It's a normal thing in this circumstance and as the insurance company have paid out they will (rightly) want their full premium paying for the year they covered at the outset.

There is (maybe) an argument that they could take the outstanding payments out of any pay out and call it even but I doubt OP you would be happy with that either. In the event them saying they can keep the policy running to add a new car onto may be the best option.

[TwigtheWonderkid]

OP, would you expect to pay say £1200 for an annual policy, paid in full, crash it in January, get a £20K payout, and a refund of £1100??? Surely not.

If not, then surely you can see that someone paying monthly cannot be left better off that someone paying in full, and that the balance had to be paid.

[PistonBroker]

As others have said, this is normal when there's been a claim.

I expect the chances of her finding cheaper insurance elsewhere, now that she's got a recent total loss fault claim to declare, are slim to non-existent anyway.

[alscar]

Solocle said:

Unlikely, if they terminate the policy early I'm pretty sure you get a pro-rated refund. That'll probably end up the default if you don't switch the policy to a new car.

Contact the insurance co. about your options, and your policy document is your friend.

Edited by Solocle on Thursday 5th December 12:25

You would only get a pro rata return of premium if the entire premium has been paid at the outset.

[Solocle]

alscar said:

You would only get a pro rata return of premium if the entire premium has been paid at the outset.

In this case the monthly premium is effectively a loan for the annual amount being repayed, so naively the pro-rated annual premium would be refunded and offset against the outstanding balance of the loan, thus ending up roughly at a monthly pro-rata minus the accrued interest on the annual amount. Depending on the precise contract.

It's certainly not going to be that you have to pay the remaining instalments for zilch in return.

TwigtheWonderkid said:

OP, would you expect to pay say £1200 for an annual policy, paid in full, crash it in January, get a £20K payout, and a refund of £1100??? Surely not.

If not, then surely you can see that someone paying monthly cannot be left better off that someone paying in full, and that the balance had to be paid.

Yes, because insurance is regulated by the FCA, and it's for the risk over the time period. The payout only covers your loss, and then if you get a replacement car you need to insure it - either under the existing policy (in which case admin charges etc), or under a new, likely more expensive, policy.

If you decide to hang up the driving gloves, you would get a refund and a lump sum, but in practice it ends up costing money.

Edited by Solocle on Thursday 5th December 15:04

[TwigtheWonderkid]

Solocle said:

If you decide to hang up the driving gloves, you would get a refund and a lump sum, but in practice it ends up costing money.

Edited by Solocle on Thursday 5th December 15:04

The contract, which is what you agreed to, will nearly always say otherwise. It'll usually say that in the event of a claim, there will be no refund of the annual premium if paid in full, and if paid monthly with money outstanding, that'll be deducted from the claim payout.

[Dingu]

Solocle said:

Yes, because insurance is regulated by the FCA, and it's for the risk over the time period.

Edited by Solocle on Thursday 5th December 15:04

That time period being a year.

[Nibbles_bits]

Jamescrs said:

There is (maybe) an argument that they could take the outstanding payments out of any pay out and call it even but I doubt OP you would be happy with that either. In the event them saying they can keep the policy running to add a new car onto may be the best option.

Why would I be unhappy? It's not my money.

The plan is, buy a new car. And the insurance will be cheaper with the same company

[Nibbles_bits]

TwigtheWonderkid said:

OP, would you expect to pay say £1200 for an annual policy, paid in full, crash it in January, get a £20K payout, and a refund of £1100??? Surely not.

No, but this isn't a £20k car. It cost less than 1/3 of the policy.

[Sebring440]

Nibbles_bits said:

No, but this isn't a £20k car. It cost less than 1/3 of the policy.

So what is it that your complaining about then?

[Nibbles_bits]

Sebring440 said:

Nibbles_bits said:

No, but this isn't a £20k car. It cost less than 1/3 of the policy.

So what is it that your complaining about then?

"I'm after some advice because I've not had any experience with this."

Where's the compliant??