insurance company problems

[kim03333]

a few months ago a friend of mine put in a claim with her insurance company after she had a car accident. the accidnet was not her fault but unfortunately the driver of another car that caused the accident could not be traced so due to her fully comp cover she put in a claim and her car was a write off. she got around �400. recently after trying to cancel her insurance (as she now doesn't have a car to insure) she was told she could not simply cancel with the usual charges as she had made a claim. she would have to pay the rest of the insurance off. she has now received a letter in the post from the insurance company demanding that she send them a cheque for almost �1000. surely this can't be right can it? if she pays this it means that she has lost out through making a claim and if she had of known this she wouldn't have claimed in the first place as it is worth more than the car. is there anything she can do about this?

[kempie]

It is absolutely correct that the rest of the premium must be paid to the insurer. Your friend entered into a contract that she would be provided insurance cover at a specified cost. The insurer could have asked for the full premium up front but instead extended credit by allowing the payment to be made in installments. At the time of the accident not all installments had been made to cover the full cost of the policy therefore a debt for the outstanding amount still exists.

As for the idea of not claiming for the accident, your friend would still be without a car, would still be liable for the outstanding payment to cover the cost of the premium but would not have received the �400 payout (making her financially worse off). To have not informed the insurer of the accident in an attempt to avoid payment of the outstanding premium installments would have been fraud - a criminal offence.

[kim03333]

ok thanks for that. yes you are absolutely right, she was paying the installments, but i was always under the impression that you could cancel insurance any time you wanted. i'm more than likely wrong though, thankfully i've never had to worry about this kind of thing. so you have to inform your insurance company of any kind of accident you have with your car, even if no third party is involved, and even if you don't wish to make a claim?

[kim03333]

sorry, i meant to say yes if she didn't claim she would still be without a car and she would be without the �400 pound payout, but that way her no claims bonus would still be intact and if i remember correctly, for my own car insurance, once i got my first no claims bonus, my insurance premium was reduced by around �500. therefore an extra �100 my friend would lose, and they take not just 1 yrs no claims bonus off you, but 2 yrs therefore she is not likely to see any significant reduction in her premium for a while yet.

[chas2008]

you can cancel anytime but once a claim has been made that prevents it, the claim is from the whole premium not just a part of it.

[danchip]

would she not be better off buying a new car and transferrign the insurance

[kim03333]

danchip she is going to do that. has spoken with the insurance company and explained she doesn't have that amount of money to pay off in one go an they have said she can pay it off in instalments if necessary so she's now going to save some money a couple of months and has decided to get a new car and transfer the insurance

[R1Geezer]

This highlights what a lot of people don't realise that when you insure a car the basic unit of time for that is 1 year, premiums are based on that. The fact that insurers allow monthly installments takes nothing away from the fact that it's an annual contract. You can only cancel, ie by not renewing after the end of the year in question.