Cancelling Car Insurance

[Negative Creep]

In February I bought a car and took out a new classic car policy for a total of £192, paid via monthly direct debit. Due to a change in circumstances I have just sold said car and therefore have no need for said policy. I phoned up today to cancel it, only to be told I'd have to pay an outstanding balance of £142! So in other words it would be cheaper to leave the policy running with nothing on it. I was told I could cancel without paying but they'd send Debt Collectors to recover the amount. I understand it's normal to get stung by an admin fee but this seems totally unreasonable. Anything I can do?

[Ekona]

What does it state in the contract you signed?

[LoonR1]

They can't charge you more than the annual cost, for pretty obvious reasons. What they may have done is charge you £142 for the time on risk so far.

[ging84]

totally fair as insurers always are

a complaint to the ombudsman will cost them far more than £142 even if the complaint is not upheld

[TwigtheWonderkid]

As classic car policies are usually mileage based, many are 100% minimum premium. Many classic car owners only use their car in the summer. So if it weren't the case, they could take out a policy in May based on 1500 miles a year, do 1500 miles in the 5 summer months, cancel it in september and get 7/12 of their premium back.

So classic car policies with no refund are very common. Not unfair at all.

Same as annual travel policies. No refund on those for similar reasons.

[ging84]

TwigtheWonderkid said:

As classic car policies are usually mileage based, many are 100% minimum premium. Many classic car owners only use their car in the summer. So if it weren't the case, they could take out a policy in May based on 1500 miles a year, do 1500 miles in the 5 summer months, cancel it in september and get 7/12 of their premium back.

So classic car policies with no refund are very common. Not unfair at all.

Same as annual travel policies. No refund on those for similar reasons.

Still doesn't explain how the cost to cancel can exceed the cost to run the policy out

[SmoothCriminal]

They're not asking him to pay more than the annual policy they're asking him to pay the remaining balance as he pays monthly.

I thought these monthly policies were on some kind of credit agreement maybe that's why.

[PurpleMoonlight]

ging84 said:

TwigtheWonderkid said:

As classic car policies are usually mileage based, many are 100% minimum premium. Many classic car owners only use their car in the summer. So if it weren't the case, they could take out a policy in May based on 1500 miles a year, do 1500 miles in the 5 summer months, cancel it in september and get 7/12 of their premium back.

So classic car policies with no refund are very common. Not unfair at all.

Same as annual travel policies. No refund on those for similar reasons.

Still doesn't explain how the cost to cancel can exceed the cost to run the policy out

Admin fee to cancel mid term?

[ging84]

SmoothCriminal said:

They're not asking him to pay more than the annual policy they're asking him to pay the remaining balance as he pays monthly.

I thought these monthly policies were on some kind of credit agreement maybe that's why.

The OP is saying that they are

Negative Creep said:

In February I bought a car and took out a new classic car policy for a total of £192, paid via monthly direct debit. Due to a change in circumstances I have just sold said car and therefore have no need for said policy. I phoned up today to cancel it, only to be told I'd have to pay an outstanding balance of £142! So in other words it would be cheaper to leave the policy running with nothing on it. I was told I could cancel without paying but they'd send Debt Collectors to recover the amount. I understand it's normal to get stung by an admin fee but this seems totally unreasonable. Anything I can do?

[ging84]

PurpleMoonlight said:

Admin fee to cancel mid term?

Yes no doubt that is what it is, but how can that possibly be fair?

[SmoothCriminal]

ging84 said:

SmoothCriminal said:

They're not asking him to pay more than the annual policy they're asking him to pay the remaining balance as he pays monthly.

I thought these monthly policies were on some kind of credit agreement maybe that's why.

The OP is saying that they are

Negative Creep said:

In February I bought a car and took out a new classic car policy for a total of £192, paid via monthly direct debit. Due to a change in circumstances I have just sold said car and therefore have no need for said policy. I phoned up today to cancel it, only to be told I'd have to pay an outstanding balance of £142! So in other words it would be cheaper to leave the policy running with nothing on it. I was told I could cancel without paying but they'd send Debt Collectors to recover the amount. I understand it's normal to get stung by an admin fee but this seems totally unreasonable. Anything I can do?

He needs to tell us the basis of his monthly payments. Is he paying them interest to split it over the 12 months.

[Denis O]

Now I wonder who the broker is

There's one around these here parts who is renowned for this behaviour.

[bitchstewie]

Ekona said:

What does it state in the contract you signed?

^^

This presumably?

I thought a lot of the "cheap at first glance" policies did this kind of thing though.

[ging84]

SmoothCriminal said:

He needs to tell us the basis of his monthly payments. Is he paying them interest to split it over the 12 months.

If there is a credit agreement involved then settling early would mean there would be less interest to pay, not more so i don't see what that has to do with anything, other than to show it is even more unfair

[Negative Creep]

SmoothCriminal said:

ging84 said:

SmoothCriminal said:

They're not asking him to pay more than the annual policy they're asking him to pay the remaining balance as he pays monthly.

I thought these monthly policies were on some kind of credit agreement maybe that's why.

The OP is saying that they are

Negative Creep said:

In February I bought a car and took out a new classic car policy for a total of £192, paid via monthly direct debit. Due to a change in circumstances I have just sold said car and therefore have no need for said policy. I phoned up today to cancel it, only to be told I'd have to pay an outstanding balance of £142! So in other words it would be cheaper to leave the policy running with nothing on it. I was told I could cancel without paying but they'd send Debt Collectors to recover the amount. I understand it's normal to get stung by an admin fee but this seems totally unreasonable. Anything I can do?

He needs to tell us the basis of his monthly payments. Is he paying them interest to split it over the 12 months.

Yes they are spread over 12 months. Have been reading through the credit agreement which states I owe a total of £166, although was told over the phone I owe the £149 including a £50 cancellation fee so at this stage I'm not sure where the discrepancy comes from. Either way, hardly seems right to have to pay a yearly fee for something I've had 3 months use from?

[TwigtheWonderkid]

Negative Creep said:

Either way, hardly seems right to have to pay a yearly fee for something I've had 3 months use from?

But in those 3 months you could have used up your entire annual mileage allowance.

[Negative Creep]

TwigtheWonderkid said:

Negative Creep said:

Either way, hardly seems right to have to pay a yearly fee for something I've had 3 months use from?

But in those 3 months you could have used up your entire annual mileage allowance.

Barely used 10% of it

[TurricanII]

You probably won't want to leave the policy active if you have sold the car. If the new owner causes a claim and your insurers are in the frame for it, they may seek to get their costs back from you:

http://www.rac.co.uk/forum/showthread.php?19031-ca...

http://www.dailyrecord.co.uk/news/scottish-news/sc...

[TwigtheWonderkid]

Negative Creep said:

TwigtheWonderkid said:

Negative Creep said:

Either way, hardly seems right to have to pay a yearly fee for something I've had 3 months use from?

But in those 3 months you could have used up your entire annual mileage allowance.

Barely used 10% of it

But how are they to know that? It's ridiculous to ask them to do a mileage verification on every cancelled policy. To much admin and it would push premium costs up anyway.