Because this blog post has gained ranking in Google for searches relating to the 14 day cooling off and cancellation period I have added the following:
For facts regarding 14 day cooling off periods, refer to the FSA handbook:
Items marked with a capital ‘R’ are rules.
If you need further advice the FSA can be contacted by phone: 0845 606 1234
It makes sense to fully read and understand the terms and conditions of your contract before committing to anything.
What I have learned: The 14 Day Cooling off period for insurance is pointless because insurance companies are allowed to charge a ‘reasonable’ fee for admin charges even if you cancel within the statutory 14 day period.
You can dispute any fees if you think they are excessive and unlawful. Your insurer should have a complaints procedure for you to follow or if in doubt, contact the FSA.
And now, the blog post! Please feel free to read on….
I used to have car insurance with Norwich Union, then my renewal was presented to me (by post) with a figure £60 more than my previous years policy price.
When are insurers going to start lowering your policy in the second year? Why are loyal customers who don’t make claims rewarded by increased premiums?
Anyway, my policy auto-renewed because I didn’t make time to sort it out but I wasn’t too concerned because according to the FSA (http://fsahandbook.info/FSA/html/handbook/ICOB/6/2 – See ICOB 6.2.2), customers are entitled to a 14 day cooling off period at the start of a new contract and a new insurance policy is a new contract. I spoke with the FSA on this and it was confirmed that a renewal is also a new contract.
However, Norwich Union treat renewals slightly differently.
The most recent update of their terms states:
‘You have a statutory right under Financial Services Authority rules to cancel your policy within 14 after the later of the date of purchase of the contract or the day of which you receive your policy documentation.’
The important phrase to note here is: ‘the later of the date of purchase of the contract or the day of which you receive your policy documentation.’
What this appears to mean is if you receive your renewal paperwork 21 days before your policy renews and you don’t cancel it until 2 days before it is due to renew, your 14 days have passed because you’ve had the new contract in your possession for over 14 days (the cooling off period).
This looks like the bending of an FSA ‘Rule’ because ordinarily policy documentation isn’t received until after the policy has started. (Although, how do they know when you actually received the paperwork…?)
What they are doing by bending this rule, (and this is were they tried to get me..) is giving themselves an opportunity to charge a cancellation fee of £52.50 for admin if the policy is cancelled during the term plus a charge for the number of days cover you may have already had.
Paying for the cover is fair enough but I was appalled that an attempt was made to charge me when I thought the cooling off period should have applied. I was even told that NU doesn’t offer a 14 day cooling off period for renewals!! This is LAW!! Perhaps the representative was misinformed? Perhaps he’d read their new terms and misinterpreted them?
One thing that did make me stop and prick my ears up was when the representative then told me that my first payment may not have gone through and therefore cover would not have actually started yet so I could still cancel with no fee.
I told the representative I wasn’t prepared to pay a fee anyway regardless then cancelled the policy and promptly called my bank.
The payment had not yet been made so I cancelled the direct debit and escaped uncharged!
I still need to confirm with NU in a couple of days that they are happy the cancellation took place before cover actually started – in their eyes. Otherwise they might still try to charge me the fee!!
Beware when dealing with insurance companies, read the terms, understand your rights and if you don’t think it’s fair, check with the FSA!
I think some of the above information is actually incorrect because I misinterpreted the terms. I’ve now re-read things and my explanation is below:
The following section:
[The important phrase to note here is: ‘the later of the date of purchase of the contract or the day of which you receive your policy documentation.’
What this appears to mean is if you receive your renewal paperwork 21 days before your policy renews and you don’t cancel it until 2 days before it is due to renew, your 14 days have passed because you’ve had the new contract in your possession for over 14 days (the cooling off period).]
If you analyze the English, ‘the later’, when referring to 2 points in time, should actually mean ‘the event that took place later in time ie. the second event.
A point ‘later’ in time from now, can only occur after now…
If they meant the event that took place first, they would have said ‘the EARLIER of the date of purchase of the contract or the day of which you receive your policy documentation.’
So now what needs to be established is ‘the date of purchase of the contract’.
I would assume it to be either the date payment is made or the date the new policy starts and because no clear definition is stated anywhere, all I can do is assume!
Therefore I must have had a 14 day statutory cooling off period from ‘the date of purchase of the contract’ in which to cancel without charge.
Henceforth, the story continues….
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