Insurance Refunds - Pro-rata???

[qwerty123]

I've took out policies on cars in the past and when I've sold the car on, I've always been stung by the insurance companies for their policy on refunds - i.e. working on a percentage which isn't based on how long you've had insurance, but instead based on their own workings.

Someone has advised me the other day that by law, if I ask for my car insurance to be refunded pro-rata (proportional to how many days the cars been insured) then they legally have to oblige.

Just wanted to ask if this is true - especially considering in the insurance forms, we normally agree to their refund terms.

Thanks

(PS. the reason I ask this is that some companies can insure me on a sports car for 12 months for a reasonable price, but if I was to only keep that car for 5 months during the summer and then want to sell it on, they wouldn't be able to insure me on a banger for the winter for a good price at all.)

Edited by qwerty123 on Sunday 23 May 17:49

[Tom H]

Not true at all depends on the insurer. However if say the couldn't take on the risk then should offer prorata.

That is to say you want to add 18 year old son onto policy with drink driving conviction. Most insurers would not what to take on the risk therefore an unacceptable amendment therefore not canceling on your terms = prorata cancelation terms

[V8mate]

They do refund pro-rata. Less an 'administration fee'.

[qwerty123]

V8mate said:

They do refund pro-rata. Less an 'administration fee'.

Is this because of the law - All my last two polciies with Churchill and Swiftcover both state in the documents that 50% (6 months period) refund does not equal 50% of the policy minus an administration fee. In the 14 day cooling off period there is a £30.00 admin fee for refund, but at 6 months, they show that you will only get 30% of your policy refunded.

[grumbas]

It will be outlined in your policy documents provided by both your insurer and broker if you've used one.

They form part of your contract, so in essence can be set at whatever the insurer wants, and you have the 14 day cooling-off period to cancel if you don't agree with them.

There are a few up-front costs incurred in setting up a policy which is why most will run short-period cancellation charges.

[Noger]

The "law" ...

http://fsahandbook.info/FSA/html/handbook/ICOBS/7

Right to cancel within 14 days. Insurer able to charge for time-on-risk, and an "admin fee". Some don't charge the latter, or even ToR. Others charge an admin fee verging on penalty.

Outside of that, they can do what they like. Many short rate in the first year, but will prorata in subsequent years. Insurance admin costs are all front loaded.

And many will pro-rata if they can't cover you post amendment.

Short rates don't have be in the policy document, they can be online or just over the phone.

Edited by Noger on Sunday 23 May 22:01