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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 25486
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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Is a car insurance cancellation fee legally enforcable ?

Resolved Question:

is a car insurance cancellation fee legally enforcable ?
Submitted: 2 years ago.
Category: Law
Expert:  Joshua replied 2 years ago.
Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience. May I ask how much is being sought please and the amount of the policy premium and when it was taken out?
Customer: replied 2 years ago.

£225, premium £731

Expert:  Joshua replied 2 years ago.
Thank you. Has a claim been made against the policy?
Customer: replied 2 years ago.

no

Expert:  Joshua replied 2 years ago.
Thanks. When cancelling a policy against which a claim has not been made, under The Unfair Terms in Consumer Contract Regulations 1999 (UTCCR) the insurer should refund pro rata the premium for the unused policy period. It is entitled to deduct reasonable administrative costs but not beyond that. The UTCCR provide that ‘a contract term that has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract, to the detriment of the consumer’.Schedule 2 of the UTCCR provides that ‘Permitting the seller or supplier to retain sums paid by the consumer where the latter decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the seller or supplier where the latter is the party cancelling the contract.’If a significantly smaller refund of premiums than could be expected as a pro rata settlement is made as would appear to be the case here you can ask the insurer to justify the amount of deduction it has made from the refund in light of the above regulations.It is normally reasonable for the firm to recover any additional administrative costs it genuinely incurs and for it to charge the costs it necessarily incurred in setting up the policy and that will not now be spread over the assumed lifetime of the insurance. If you consider that their response fails to reasonably explain or justify the amount of deduction it is made in light of the above regulations and guidance, you can raise a formal complaint to the insurer. If the insurers response does not satisfy you, you can refer your complaint to the financial ombudsman free of charge which can independently look at the insurers position and make a decision on whether the insurer has acted fairly in accordance with the above regulations or not and where it finds it is not, award compensation to you to compensate you for the amount it belives should have been refunded and potentially a further sum to take account of the time and trouble you were put to in pursuing the complaint.http://www.financial-ombudsman.org.uk/consumer/complaints.htm I hope the above is of assistance? If you have no further questions for now I should be very grateful if you would kindly take a moment to click to rate my service to you today or just reply back to let me know if the above is helpful. Your feedback is important to me. If there is anything else I can help with please reply back to me I'd be very grateful
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