Penalty for cancelling insurance in first year?

B

Bluegrass

Registered User
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7
Hello,

My son recently bought car insurance approx of 4,000.00 for the year.

As he only became insured two weeks and two days ago, there are a number of documents which he has not yet submitted to the insurance company to finalise the insurance and therefore he has not received the policy document and details of the insurance.

He wants to cancel his insurance and has been told that he will be penalized by approx 1,000.00 for cancelling insurance in the first year- even though he has only been insured for 16 days. (2 days outside the cooling off period)

I have argued that at no time were we told that there would be a penalty applied for cancelling insurance, given that we haven't been given the policy documents at this point.

So, are the insurance company within their rights to retain this penalty amount given the above situation?

If not has anyone any ideas about how I might get this back?
 
It was likely made clear in the quotation whether over the phone or in writing that a penalty would apply in the first year if the policy was cancelled.

He's not within cooling off period so that has no bearing.
 
peteb said:
It was likely made clear in the quotation whether over the phone or in writing that a penalty would apply in the first year if the policy was cancelled.

He's not within cooling off period so that has no bearing.
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Hi

Just to clarify - NO advice regarding a penalty was made at any point over the phone and there's nothing in writing either at this point.

If this had been made evident (the penalty clause) then there is no way that full payment would have been made!
 
Devils advocate - was cover placed over the phone? If so then you are relying on your son to relay what he was told to you.

If you hadnt have made payment in full you wouldnt have got cover.

whats the reason for cancelling?
 
The 25% penalty sounds excessive - that's just my opinion, not having seen any T&Cs. The entire scenario sounds odd though. Insurance companies normally hold insurance documents until they receive the driver's licence and car registration documents. Why supplying these would take 16 days is a mystery.
 
A quick search on Google came back with the answer that yes the insurance company is within their rights and it seems it is normal policy to do this in the first years premium.
 
mathepac said:
The 25% penalty sounds excessive - that's just my opinion, not having seen any T&Cs. The entire scenario sounds odd though. Insurance companies normally hold insurance documents until they receive the driver's licence and car registration documents. Why supplying these would take 16 days is a mystery.
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25% in the first 3 months would be fairly standard.
 
Thanks guys. That condition is outside my experience. My motor & home insurers DD me 1/12 of my premium each month - no finance charges, no up-front deposit, nice and simple (and fairly cheap!)
 
mathepac said:
The 25% penalty sounds excessive - that's just my opinion, not having seen any T&Cs. The entire scenario sounds odd though. Insurance companies normally hold insurance documents until they receive the driver's licence and car registration documents. Why supplying these would take 16 days is a mystery.
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haha...no mystery - they're only gone in because daddy is doing it..!!
 
ALL companies state their cancellation policies clearly on the Policy document.
 
Cervelo said:
Well if it was "Fronting" he didn't get a great deal !!
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That's because people that do it presume they are going to get a great deal. And they dont. Because the insurance company rates the policy on the most loadable driver whether they are listed as the main driver or the 4th driver of the car.
 
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