14 day cooling-off period for motor insurance

[Ed/L152]

I'm needing to cancel an motor insurance policy after 5 days of cover, and am I being refunded significantly less than the total policy cost. On querying this the agent from Aviva has told me that, "there is no cooling-off period for motor products".

I thought the 14 day cooling-off period allowing cancellation without penalty was a legal requirement, am I wrong?

Thanks!

[anonymous-user]

Aviva's 'cooling off period' appears to be 14 days from policy purchase or receiving documents - whichever occurs latest.

When did you purchase the policy? Have any documents been received?

[alscar]

You won’t get 5 days free cover and assuming it was you that cancelled I imagine they have utilised short rate cancellation tables to calculate the refund.

[TriumphStag3.0V8]

By law there is a 14 day cooling off period for insurance:

https://www.citizensadvice.org.uk/consumer/insuran...

I suppose the concept of a "small administration charge" is open to interpretation. plus pro-rata for the days used. You will get back less than you paid. Depends what you consider "significantly less"

The Aviva agent is incorrect. Let's be charitable and say that he is mistaken and needs some training as Aviva are a reputable company. In fact their own website mentions it....
https://www.aviva.co.uk/insurance/motor/car-insura...

And from Go Compare:

GoCompare said:

Under UK law, all car insurance policies have a minimum 14-day cooling-off period. This begins as soon as your cover starts or when you receive your insurance documents – whichever of the two is later.

During this time, you can cancel the policy for any reason.

https://www.gocompare.com/car-insurance/guide/administrative-charges

Cooling off period does not mean full refund.

Edited by TriumphStag3.0V8 on Wednesday 24th August 17:42

[Ed/L152]

To expand, I paid for the year by card, around £400. The refund is around £45 less for 5 days of cover. I got all the documents immediately by email. I'm not expecting free insurance for that period, but nor was I expecting a cancelation fee, and nor was I expecting 'there is no cooling-off period for motor products' which I thought was a statutory legal right.

Of course I'm stupid for taking cover and then needing to cancel after 4 days.

Edited by Ed/L152 on Wednesday 24th August 17:45

[TriumphStag3.0V8]

Ed/L152 said:

To expand, I paid for the year by card, around £400. The refund is around £45 less for 5 days of cover. I'm not expected free insurance for that period, but nor was I expecting a cancelation fee, and nor was I expecting 'there is no cooling-off period for motor products' which I thought was a statutory legal right.

Of course I'm stupid for taking cover and then needing to cancel after 4 days.

It is worth challenging it I think - if the berk you spoke to was adamant that there is no cooling off period he may have charged the wrong admin fee.

Depends if you think it is worth sitting on hold for however long they take to answer in order to get back probably £20.

Couldn't hurt to fire off an email mentioning cooling off period and how you are surprised that their agent insisted this does not apply to motor cover and could they please break-down the £45 that they have charged.

[vaud]

I thought cooling off only applied before the product came into effect?

i.e. if you sign up for cover starting on Sept 1 and cancel on August 25th? In this your cover has started?

[jondude]

I seem to remember always seeing 'you have 14 days to cancel the policy if you want to .....but we may (means will) charge an administration fee and we will charge for the days the car was insured'

The fee to cancel is normally listed (I think my company says £45) but I don't recall the 'days used' fee. Maybe they take one month minimum, or around 10% of the premium whether one day or 14 (like the DVLA)?

[alscar]

However, your insurer may take off a small amount to cover days when the policy was in force. They may also charge you a small administration fee.

Taken from that article link.

Short rate might mean say £10 for the 5 days cover and then admin charge on top.
The word small is debatable but £45 sounds toppy to me - would have thought around £25 more in keeping.
What does policy say as regards admin fee quantum ?

[FunkyGibbon]

Ed/L152 said:

To expand, I paid for the year by card, around £400. The refund is around £45 less for 5 days of cover.

Have they specified how they arrived at the refund value? 4 days cover would be about £5ish - only your policy would tell you what admin fee should be.

[wpa1975]

When I did it in the past with 2 different companies in both cases they charged an administration fee as well charged for the days at risk.

[Unreal]

The calculation will be in the policy documents you were sent when you took out the policy.

Insurance companies aren't in the business of providing free cover and short term cover is always more expensive than long term (typically annual). You're never going to get charged at a pro rata rate based on the annual fee and there will be an admin charge as well. All completely legal.

It's not hard to imagine people using an annual policy and cancelling it as cheap one or two day cover if the approach was different.

[Disco You]

Ed/L152 said:

To expand, I paid for the year by card, around £400. The refund is around £45 less for 5 days of cover. I got all the documents immediately by email. I'm not expecting free insurance for that period, but nor was I expecting a cancelation fee, and nor was I expecting 'there is no cooling-off period for motor products' which I thought was a statutory legal right.

Of course I'm stupid for taking cover and then needing to cancel after 4 days.

Edited by Ed/L152 on Wednesday 24th August 17:45

£45 seems reasonable for 5 days of cover - if it was much less, people wouldn't ever bother with temporary insurance policies would they...

[wpa1975]

Just checked mine with the AA

Cancelling your policy

In the cooling-off period
You have a cooling-off period of 14 days from the date you receive your policy documents. If you cancel your policy (and your additional cover) during the 14 days and your cover hasn't yet started, then we'll give you a full refund, including our arrangement fee of £28.00.

Your cover has started, and you haven't made a total loss claim, then we'll give you a refund minus a charge for the period of cover used. We'll also retain our arrangement fee of £28.00.

[TwigtheWonderkid]

Ed/L152 said:

To expand, I paid for the year by card, around £400. The refund is around £45 less for 5 days of cover. I got all the documents immediately by email.

So the actual cover is just over a fiver pro rata, and they're charging you £40 on top. You've had all the docs by email, your details have been passed to the MID, they've got the extra work of cancelling and advising the MID.

I'd say £40 was reasonable for all that messing about, and could be justified as a small admin fee.

[Mojooo]

financial services distance marketing regulations

allows for an admin charge.

[final_edition]

I had to cancel 5 day old policy with Hastings this week.

There wasn't an admin fee. I had to pay 5 days of cover, of around £1.50.

[Ed/L152]

It seems like I've been charged pro rata for the 5 days, plus a £38 fee, or something like that. I wasn't sure if a cancellation fee could be charged within the 14 day cooling-off period, but it seems like it can. Thanks all.

I suppose that some fee is reasonable to create a niche for temporary cover products, but I dont think the fixed costs of providing cover (updating MID, calculating the risk, etc) are really worth £38 per policy.

Edited by Ed/L152 on Thursday 25th August 08:37

[deckster]

Ed/L152 said:

It seems like I've been charged pro rata for the 5 days, plus a £38 fee, or something like that. I wasn't sure if a cancellation fee could be charged within the 14 day cooling-off period, but it seems like it can. Thanks all.

I suppose that some fee is reasonable to create a niche for temporary cover products, but I dont think the fixed costs of providing cover (updating MID calculating the risk, etc) are worth £38.

I know a little about the economics of call centres. It is entirely likely that the phone call to process the cancellation cost them over half that £38 just by itself.

[vikingaero]

The situation here is that cover has started and where the pro-rata cover and admin fee comes into effect.

If I take out a policy today to start on 19/09/2022, then you could invoke the 14 cooling off period.

Interestingly, I recently cancelled my mums motor policy with One Call. £500 renewal vs £301 with a new Insurer that I'd taken out cover for. One Call were so desperate to retain business that they wanted to requote and would cover any cancellation fees.