Research has shown that a significant number of motorists are finding it very difficult to cancel car insurance policies when renewal time comes around. Many firms are now automatically renewing insurance each year unless customers specifically call and cancel their policy.
So far this year, the Financial Ombudsman Service has had 580 complaints involving auto renewal. Most drivers who take out insurance think they are securing cover for the coming 12 months, many just do not realise until it is too late that they are signing up for continuous cover unless they physically cancel the policy.
Nigel Liddle from Gloucestershire took out insurance last year and when his renewal came up 11 months later he had found a cheaper quote online and decided to cancel by letter. However when he checked his bank account, he found the insurance payment had been taken out for the next policy. When he complained the insurance firm told him it had not received the letter and so his insurance had continued and it would cost him £43 to cancel. The research found that other motorists have also had their insurance renewed against their wishes.
Insurers have defended their auto renewal procedures as when they sell insurance on a continuous renewal basis, they always tell the customer at the start that the insurance will be renewed after twelve months. They also send out a renewal letter to confirm the continuous payment method. The letter also informs the customer that if they are happy to renew they don’t have to do anything and clearly states that if they do not want to renew they have to call to cancel as letters may get lost in the post.
Malcolm Tarling from the Association of British Insurers said “I agree with auto renewal as it is a valuable service. Insurance companies are finding increasing numbers of customers with busy lifestyles who inadvertently find they haven’t renewed their policy. Insurance companies do not offer the auto-renewal option as a way of keeping customers by stealth. What they are trying to do is make sure people are covered.”