The insurers won’t refund the money on a cancelled policy for a motorcycle

The insurance broker said there'd be no refund on a 12-month policy, which was cancelled after four months. Photograph: Mark Blinch/Reuters


My father-in-law, who is in his 70s, was four months into his 12-month insurance policy for a 125cc motorbike when he sold it. The policy cost him £118.51.

He phoned to cancel the policy with the broker, Bikesure, and to inquire what rebate he would get on the insurance the broker had arranged with Zenith Insurance, only to be told there would be no refund for the eight months for which the policy would not be required.
It seems to me that a rebate should be paid for the unused months or is the broker just trying to pocket this for themselves? Any help would be appreciated. NA, Grantham, Lincs

You are right – your father-in-law should have received a refund. But once all the charges and fees are deducted it’s barely worth having. The refund he should have been offered on his £118.51 annual policy cancelled a third of the way through was just £7.72.

It works out like this. Bikesure’s arrangement fee on the £118.51 he paid was £30, which is not refundable, so the policy itself was only worth £88.51. The insurance company charged £53.11 for the portion of the insurance he used before selling the motorbike. Then there is the broker’s £25 cancellation fee plus £2.68 commission held back by Bikesure. Once all that’s taken off the refund he was due was slashed to £7.72. Nice work if you can get it.

Bikesure admits the charges seem disproportionate on a small policy but argues that it has the same overheads and work to do on a low-cost policy as on one costing £1,000. However, in recognition of the fact it should have realised there was a refund due, it is waiving its cancellation fee and will be sending him £32.72.


Liz Phillips answered this letter. Anna Tims is away
If you need help email Anna Tims at your.problems@observer.co.uk or write to Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU. Include an address and phone number.

　

Source: The Observer