Getting to the bottom of insurance refund issue
QI BOUGHT a motor policy from broker Adrian Flux, but just over a month later, I decided to sell the car. I phoned Adrian Flux to cancel the cover and get a refund on the unused part.
But I was informed a fee was required to cancel and that it would be higher than what I would be owed back as a refund.
I was asked if I really wanted to end the cover because it would cost me more than doing nothing.
As I no longer owned the car, I obviously did not want the insurance and told them to forget it.
AMOST people who sell a car, buy another one, transferring the unused insurance. Those who don’t expect a refund for the remaining months. But you don’t get the exact proportion.
Insurers lay down costs such as administration, commission for cancelling a policy which brokers pass on. Insurers must also reserve against a claim turning up in the future.
Adrian Flux is a broker, specialising in unusual cars such as kit cars and classics used for low mileage.
It can only tell you what the ultimate insurer says cancellation will cost.
You would normally get a refund after just a month or two – on a typical £600 policy, it would be around £400. But in your case, you insured a classic Mini from the 1980s on a low mileage basis, with a bargain basement premium of about £100. The insurer would have refunded you £30 but there was a standard £50 charge so you would be £20 worse off. That’s why the broker told you to forget it.
However, the broker has had a second look at your policy and found contradictory information in the details. It says some small print indicates that the customer is not entitled to a refund due to the low annual premium. But it says an alternative wording suggests you would be entitled to a very small refund after deducting the insurance company’s administration fee.
The firm says: “Regardless of the correct cancellation terms, as a gesture of goodwill we will be issuing a refund that represents a proportionate charge for the time on cover with no further deductions.”
You should soon receive a cheque for around £80.
They said they would cancel it but I would get no refund. What is going on? David