NCD News: Cheaper Insurance? Only if you don’t cancel the policy
Cheaper Insurance? Only if you promise not to cancel the policy
After receiving several reports from angry customers about their insurer’s cancellation charges, (some in excess of £140), www.noclaimsdiscount.co.uk researched some of the major insurers to find out what these charges were based on and why consumers were seemingly unaware of them prior to purchasing the policy -- in particular, the “administration fee” for cancelling your policy. The charges themselves proved concerning, though not as much the lack of clarity.
Elephant.co.uk has a cancellation administration fee of £47.50 - but this was only found out after come considerable digging.
The same was true of Liverpool Victoria who had to be badgered a little on their Live Help service before admitting to a £35.00 cancellation admin fee.
Saga will only charge you if the administration cost incurred exceeds £5.00, although they don’t offer an upper ceiling limit.
The AA charge £25.00 but the terminology used in the booklet was far from clear, and it took a phone call to have it explained properly.
There were many other insurers who would have to be directly contacted to find out the charge -- such as the RAC, Sheila’s Wheels, Sainsbury’s, Churchill, Esure, Co-op and Privilege who all used the following type of terminology to advise of an impending charge whilst refraining from disclosing the actual sum:
“Less an administration fee to take account of our costs in providing your policy. The fees are detailed in your Schedule” -- indicating that people are only notified of the “cancellation tax” after the policy is taken out.
Such is not always the case:
MORE THAN, for example, have no problems advising you that it will charge a hefty £55.00 should you wish to cancel mid-term.
Zurich levy a £50.00 charge if you cancel during the first year.
Barclays Insurance seem more reasonable with £26.50.
Swiftcover.com rank as one of the lowest with a £25.00 admin fee for cancellations. Not only was this lower than most, but all their charges were laid out in a clear and concise manner with viewable policy documents containing a complete breakdown of the percentage premium refund to be expected over the year.
Further, out of the several insurers NCD News questioned about the justification for these fees, Swiftcover.com were the only ones to officially respond. Craig Staniland, Underwriting Director for Swiftcover.com, told NCD News: “Swiftcover.com does charge £25 to customers who cancel their policies during the first 14 days. There are two reasons for this nominal fee: to cover our administration costs and to also reduce the number of people who enter into a motor insurance contract and cancel at the first opportunity once they receive their Certificate of Insurance.”
It is always worth writing to the insurance companies to ask for a breakdown of the fee prior to purchasing the policy. Any quote you receive from them will generally be valid for up to 30 days. If you have already been hit with such fees, write to your insurer asking for justification -- if the fee is proved to be unjust or they offer “just because” as a reason, you should be entitled to a refund, if they refuse then threaten to take the matter further.
www.noclaimsdiscount.co.uk/news editor, Michael Beverley, said: “If insurers want to charge large amounts in cancellation fees then not only should they be completely clear to the consumer before purchase, but some justification should be given as to why their charge is more than double that of another insurer. Maybe if a wave of resistance can get going, insurers might start re-evaluating their ’admin fees’ before they become as big a target as bank charges and PPI mis-selling.”
About www.noclaimsdiscount.co.uk: NCD covers insurance related news aimed at both the industry and consumers, providing a balanced look at developments that could affect it’s readership. You can find more information on the insurers covered in this article at www.noclaimsdiscount.co.uk/insurance/
Original article: http://www.noclaimsdiscount.co.uk/news/art_display.php?show=200812061
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