Cancelling Insurance - does anyone get a refund anymore?

[klaus_von]

Background - when we changed our van our insurer couldn't insure our new van (no idea why) so we cancelled, and immediately started a new insurance policy with a different company.

Now I get it, companies need to make money, and we were outside our 14 day cancellation on the old van. The insurance had been running for about 7 weeks by that point. The policy wording implies that we would be due for a pro rata refund. I imagined that would be our premium, minus insurance tax, minus legal cover, minus a fee, split over 12 months and refunded for the months not used... we're probably talking a round of drinks (north of Watford).

For the second time this year (first was mcycle policy) my cancellation fee has suspiciously been exactly what I would have been owed pro rata, effectively negating any refund.

Don't get me wrong, I probably need to get my magnifying glass out on the small print, but it feels a bit off.

Are we all being taken for a ride, or am I making a mountain out of a mole hill?

 

[Dustydog]

It’s hard to comment without seeing the cancellation wording.
For a cover only seven weeks old I am surprised you received a zero refund🤔

 

[Mr Plodd]

All in the T&C's I am sure, but it does seem somewhat wrong to me.

 

[Buckman]

We have always got pro rata refund. After all is it your fault that they cannot insure the new vehicle? Happened to us twice in the past 3 years.

 

[ProfJohnL]

This does seem odd. Do the t&c's define what the cancellation fee covers and how it's calculated?

If it doesn't, then I think it's an unfair contract.

If it does define it, then it's another case of a consumer not satisfying themselves of the suitability of the insurers offer before taking out the policy.

Basically if you don't like a clause in the t&c's, you have the option to ask about it, discuss the possibility of changing it (withe an insurance policy it is unlikely), or finding a different provider whose clauses you agree with.

Buyer beware!

 

[klaus_von]

This does seem odd. Do the t&c's define what the cancellation fee covers and how it's calculated?

If it doesn't, then I think it's an unfair contract.

If it does define it, then it's another case of a consumer not satisfying themselves of the suitability of the insurers offer before taking out the policy.

Basically if you don't like a clause in the t&c's, you have the option to ask about it, discuss the possibility of changing it (withe an insurance policy it is unlikely), or finding a different provider whose clauses you agree with.

Buyer beware!

I have to admit that I generally read the policy information document, but not the terms of business.

I suppose if someone came to your front door asking for a couple of hundred quid, you'd read every bit of small print you could find.

I'll look through the terms today and see if I can screenshot the paragraph.

 

[klaus_von]

As expected, all very vague.

The intermediary terms of business allude to a refund, but advise reading the insurers policy wording.



The insurer policy wording does the same, referring to the intermediary cancellation fee, which I know is £50.



I'm in the process of lodging a complaint with both, purely to highlight the lack of clear information for the consumer.

Sounds petty, but an annoyance when that money has gone straight into their Christmas party fund.

 

[ProfJohnL]

It does tell you a refund is dependant on the policy period remaining, though it doesn't tell how it is specifically calculated and what division of the total premium would be applied ( i.e. daily, weekly or monthly remaining) It also doesn't tell you what if any insurance company (not intermediary ) admin fees might be applied and thus not refundable.

It does mention the intermediary fees (Assuming you used one) and that is legitimate as there is a cost to changing documentation, the the commision paid, Insurance brokers/intermediaries are seperate companies and will have their own tariffs.

The statements clearly identify there is a cost to closing a policy they lack clarity regarding the actual charges or methods of charging and as such it is open to debate.

Whether in your case it's worth challenging it, only you can say.

As the law stands at the moment it's all parties responsibility to review and ensure that all aspects of the transaction and clauses meet with mutual agreement. If an aspect is not satisfactory there is nothing to stop any party from asking for a clause to be clarified, added, amended or rescinded, provided all parties agree, and its is recorded on all copies of the documents that becomes the contract. However it is also very unusual for a company to accept changes to their standard T&C's.

Once the contract has been agreed and accepted your locked into the contract, and its is usually only highly exceptional circumstances if such an agreement to be put aside as being unfair.

 

[otherclive]

It does tell you a refund is dependant on the policy period remaining, though it doesn't tell how it is specifically calculated and what division of the total premium would be applied ( i.e. daily, weekly or monthly remaining) It also doesn't tell you what if any insurance company (not intermediary ) admin fees might be applied and thus not refundable.

It does mention the intermediary fees (Assuming you used one) and that is legitimate as there is a cost to changing documentation, the the commision paid, Insurance brokers/intermediaries are seperate companies and will have their own tariffs.

The statements clearly identify there is a cost to closing a policy they lack clarity regarding the actual charges or methods of charging and as such it is open to debate.

Whether in your case it's worth challenging it, only you can say.

As the law stands at the moment it's all parties responsibility to review and ensure that all aspects of the transaction and clauses meet with mutual agreement. If an aspect is not satisfactory there is nothing to stop any party from asking for a clause to be clarified, added, amended or rescinded, provided all parties agree, and its is recorded on all copies of the documents that becomes the contract. However it is also very unusual for a company to accept changes to their standard T&C's.

Once the contract has been agreed and accepted your locked into the contract, and its is usually only highly exceptional circumstances if such an agreement to be put aside as being unfair.

But if the OP doesn't receive an acceptable explanation he could presumably use the company complaints procedure and if necessary elevate it to the Financial Ombudsman.

 

[RogerL]

The fee paid to the intermediary won't be refundable in this case

 

[Dustydog]

It seems the OP used an intermediary to arrange his insurance.(Broker or Agent?)

Clive correctly points out the OP must follow the contractual complaints procedure . With both broker and insurer. Surely the Broker should be fighting the OPs corner too?

But has anyone actually done anything wrong? Who paid the fee to the intermediary? Usually it’s the Insurer paying brokerage.

 

[ProfJohnL]

But has anyone actually done anything wrong? Who paid the fee to the intermediary? Usually it’s the Insurer paying brokerage.

I don't think anyone has done anything wrong - i.e illegal, but arguably the customer might have chosen a different insurer if they offered more favourable refund policy.

Whoever paid the intermediary is not really relevant in this case. But with insurance brokers usually get commision paid by the insurance company. I do know some businesses will directly pay brokerages to source and manage insurance matters, but its rare for individual members of the public to do so.

And yes of course if the OP wanted to pursue a complaint he would have to follow the insurance companies complaints procedure, and onto the ombudsman if necessary.

 

[Dustydog]

Perhaps I have the wrong end of the stick here?

I thought the intermediary arranged the Insurance for the OP?
Surely they have a duty of care to ensure the product sold is correct and any T+Cs are explained at inception?
Why else would an Intermediary carry Professional Indemnity Insurance?
Just a thought😉

 

[klaus_von]

Thanks for the replies, I think the moral here is read the Ts&Cs (however vague they may be) and don't expect anything back!

As I said in my original post, I'm sure a few years ago it was fairly routine to get a bit back after a cancellation. It feels like today's climate is more 'take what you can from the consumer, and only give back if challenged'.

 

[ProfJohnL]

Perhaps I have the wrong end of the stick here?

I thought the intermediary arranged the Insurance for the OP?
Surely they have a duty of care to ensure the product sold is correct and any T+Cs are explained at inception?
Why else would an Intermediary carry Professional Indemnity Insurance?
Just a thought😉

An intermediary or broker or indeed most other professionals need indemnity cover for many reasons other than client disappointment.

 

[Buckman]

Thanks for the replies, I think the moral here is read the Ts&Cs (however vague they may be) and don't expect anything back!

As I said in my original post, I'm sure a few years ago it was fairly routine to get a bit back after a cancellation. It feels like today's climate is more 'take what you can from the consumer, and only give back if challenged'.

I am fairly certain there are guidelines to prevent this happening and insurance companies are by law required to give you a pro rata refund. Your best bet is ask Which Legal Services.