insurance credit agreements

[ike]

Just hoping someone is in the business and can help.

My son took out his own insurance last year for the first time. He paid monthly under a credit agreement. The insurance renewal date was 4/1/08 but he didn't get the details in time and didn't realise until 3 days ago. By not responding to the renewal letter nor sending a signed copy of a fresh credit agreement as provided for the new insurance term. Not having paid the first installment for the new term, he logically assumed that his insurance had ceased, and their terms and conditions state this anyway.

So he shopped around and got a better deal and is fully insured. On contacting the previous broker, he was told his insurance had been renewed and was in effect, and that on signing the original credit agreement that he has agreed to continue paying on a continuing basis. This is contray to their terms that state the policy is automatically cancelled on non-payment of a monthly installment. They are saying he is still bound by the credit agreement. But if that were so, then why would they issue a fresh credit agreement for him to sign and return. As he hasn't sent them a signed copy, I don't think he is liable to owe them anything. He completed a full years payments for a full years insurance and that is it. Anyway he is informing them by letter of cancellation, asked the bank to cancel the DD and is with the stated 14 day cooling off period.

The brokers come across as a bunch of sharks. I'll swear they are trying to misinform him to extract more money. He is off to CAB to get their opinion too. I don't think they have a leg to stand on. What does the team think?

cheers,

ike

 

[CHJ]

I am no expert on this but I think you will find that signing an authority for a direct debit you are giving the company authority to debit your bank until such time as they cancel it, I think the only legal way is to inform them in advance that you want them to desist the deductions on a given date and tell the bank that you have done so.

I came across this when I stopped a DD with the bank because of a similar continued deduction, it worked but I was formally informed that I had acted incorrectly in the matter.

 

[Mike.C]

I am no expert but surely they have to send him details of the new premium and excess etc, before the renewal date, to give him a chance to look at it, and take his business elsewhere if he is not happy?
Every year my insurers send me a renewal notice about a month before it is due.

My understanding is that a policy runs for a year (5/1/2007 to 4/1/2008) and so the credit agreement that he signed would have been for a year, otherwise why would they have sent him another one to sign?

I hope you son gets it sorted out soon.

Cheers

Mike

 

[ike]

Mike wrote:

My understanding is that a policy runs for a year (5/1/2007 to 4/1/2008) and so the credit agreement that he signed would have been for a year, otherwise why would they have sent him another one to sign?

My conclusion too. The credit agreement (the usual type form you see) is an annual agreement binding until the final installment is paid. He honoured that until the renewal date. Then it is replaced with a new agreement (payment schedule). As he didn't sign that, there is no current agreement, so they can't 'sting' him for cancellation fees etc. Despite telling him they have automatically re-insured him, if he had an accident and attempted to claim, you could bet your backside they would reject it outright!.

He has sent a cancellation letter today - still in the 14 day cooling off period, so I'm pretty sure they have to let it go. Failing that, I'll send them a 10-day cease and desist etc letter, copies to Trading Standard and the Omsbudsman.

Underhand and unscrupulous business practice I think, cynically preying on an inexperienced customer..

cheers,

ike