OTT Cancellation Fee

[paraffin]

Hi,
Is it justifiable for my insurance company to demand a fee of almost �73 simply because I've chosen to cancel my car insurance premium with them? I've made no claims etc and although I respect their right to a certain amount I just think that what they are asking is outrageous.

[blue..colour]

Unjustifiable and immoral if you ask me. My daughter was in a similar position except her fee was �93. She couldn't pay so I paid it for her (she will be paying me back!!) I queried it with the girl on the phone and her reply was "the computer works it out so it's definitely right". Fair enough, charge a nominal admin fee but this is completely unreasonable.

[Ethel]

I assume you bought insurance cover for a full year and that is the contract you made with them.

If you waited until the end of the 12 month there would have been no fee. How many months were left to run?

[blue..colour]

btw if you're looking for cheap car insurance try the following. It will put a smile back on your face:-

http://www.comparethemeerkat.com/tv-ad.html

[kempie]

When you take out a car insurance policy you are entering into a contract with the insurer. You agree to pay them and they will insure you. Leaving the contract early (excepting the 14 day cooling-off period) is technically a breach of that contract and the insurer is legally entitled to demand the full payment. Most will stop short of insisting on payment in full but it is common for insurers to apply 'administration' fees that make it disadvantageous to cancel a policy.

[Ethel]

Another consideration is that short term insurance is very expensive, if compared to a 12 month policy.

Some people have taken out 12 month policies knowing they will be cancelling after a month or two, in the hope of getting short term insurance cheaper.

[paraffin]

To: blue..colour / Ethel / kempie:

Thanks for all your responses - much obliged.
I can only say to Ethel and kempie that I had no choice but to cancel the policy because I no longer owned the car, therefore no longer required the insurance cover.
I fully accept the fact that I'd entered into a contract which I had to cancel early, but what other choice did I have? There was no point in me continuing to insure a car which I no longer owned.
My main "beef" is the amount demanded by the insurance company. Why so much? It just seems like a money making exercise to me. I already have another car insured with the same firm as it is, not to mention my home insurance (for the past 30 years!).

[kempie]

In response to your last sentence, it is unfortunate that many businesses fail to reward customer loyalty e.g. better rates being offered to "new customers" rather than to their current customer base (this is actually a bugbear of mine). I'm sure your insurer didn't even consider that you posessed other policies with them or the amount of time you have been a customer as being relevant factors in the calculation of the fee.

They also care little that you had no "other choice" but to cancel. Their business model will include a percentage of policies being cancelled; the incurred fees allows them to offer reduced premiums across the range of their policies to entice custom.

[flip_flop]

If it was cancelled in the first year of the policy then short-period rates will apply, as this recognises the acquisition costs of obtaining the business.

Short period rates are on a sliding scale depending on when in the year the policy is cancelled.

If the policy was cancelled after the first year, then I'd be extremely surpised if the cancellation was anything other than pro-rata.

[johnny37]

Financially the insurers have to make a profit. 'The Computer' would have worked out how much it hascost to set up and administer your policy plus the number of months you have been covered. It is not a fee. If you have paid for the whole year you cannot expect a pro rata refund as shorter periods have heavier premiums to balance out the costs.

[paraffin]

Much obliged to all who have taken the trouble to respond to my "moan"! We can all live and learn regardless of how long in the tooth we are. Caveat emptor and all that!
Take care.

[PeasAndRice]

i dont thinks its that unreasonable.... in terms of charges, they need to administrativly cancel you policy, update therie systmes, inform the nation police database, of course write to you....So whatever person does that needs to be paid....The rent on the building she works in needs to be paid, they lighting and heating for that person needs to be paid, the business tax needs to be paid....

people often underestimate the costs to companies....in real terms �75 is probo about 3 hrs work....so i don see that as too unreasonable

[johnny37]

Peasandrice. I think the hourly rates have gone up! Garages will charge you arounf �70 per hour and I know my tv engineer charges the tv company �65 call-out under warranty

[PeasAndRice]

which is my point, i think you are getting a good deal...