Insurance Company Forgot to take Payments

JHet

Hi

My sisters car insurance company forgot to take payments for the last number of months. They contacted her recently to make her aware of this and then informed her that they would have to take a 200 euro instead of a 50 euro payment. I believe the agreement is through a finance company.

The problem is she's a student, not the best with money and now can't afford. I don't know how she didn't spot it hadn't been coming out of her account anyway thats a different story, these things happen.

She asked me for advice on it. I said she will probably have to pay it back in the end but its incumbant of the finance company to come up with a payment method that affordable for her. Its not fair or equitable to expect her to pay it all back now as a result of their mistake.

Shes at her wits end about it now and considering just canceling the policy(as i say student and no money!). I said thats probably not the best idea and it could affect your credit rating.

Where does she stand from a consumer point of view on this? I'd like to give her some better advice that will create the best outcome for her and alleviate her concerns somewhat.

Thanks

Chris_5339762

I dont think she has a standing to be honest, the 'consumer beware' would state that she should have realised the money isn't going out of her account as it should and it should be kept aside for payment. There really is no comeback for someone who knew full well they had to pay the bill, the bill didnt get paid due to the companys mistake, the person goes ahead and spends that money on something else and then cries poverty when the company want their money.

Lesson learnt IMO. Get in touch with them, explain the situation and try to arrange a payment plan. I'm sure they will be reasonable but the money has to be paid.

JHet

I agree 100% but they are refusing to play ball stating that they are changing the direct debit mandate and that they want the money now which is unreasonable. I've advised her to cancel the direct debit until they come to a more reasonable arrangement regarding outstanding monies owed. There is joint responsibility here, my sister was in the wrong for not knowing this but the insurance company were also in the wrong for not spotting their mistake earlier and informing her in a timely manner of the error. It went unnoticed for over 6 months. I've also told her that the insurance should provide proof in writing that she was covered during the period the payments were not made. Again they are refusing to do this until full payment is made.

Nody

200 EUR at 50 a month is 4 months (and one of those being the current month leaving it at 3 months missed); not six. Secondly if she's not paying for the insurance I highly doubt she'll be covered...

hfallada

Part of contract is that there must be consideration which is something of value exchanged between both parties ie her money and they giving her insurance. If she doesn't pay I cant see the insurance company paying if she needs to claim.

If I was her I would ask for a good will gesture of knocking off a month or if they can put that €200 on the premium and pay more than she originally intended in the month

JHet

Nody wrote: »

200 EUR at 50 a month is 4 months (and one of those being the current month leaving it at 3 months missed); not six. Secondly if she's not paying for the insurance I highly doubt she'll be covered...

The 200 is per month for the remainder of the term.

Oryx

So they missed some payments six months ago and are only catching up now, and 200 will be a final payment for the year?

JHet

Ok to clarify I did say over six months (didn't specify exact).

But for those who want to know they missed 9 months payments at 50 per month. So for the remaining 3 months they want to charge her 200 per month which will recoup the full 600.

Oryx

JHet wrote: »

Ok to clarify I did say over six months (didn't specify exact).

But for those who want to know they missed 9 months payments at 50 per month. So for the remaining 3 months they want to charge her 200 per month which will recoup the full 600.

Ah, I gotcha now.

Tbh, if your friend got insurance for nothing for nine months I think they are entitled to look for the payments over the remainder of the policy. Otherwise she could walk away and never pay it.

JHet

Agree.

Both parties are partially to blame here. The problem is the insurance company are not co-operating. They are refusing to spread the payments and refusing to admit in writing that she was covered which I feel is highly unreasonable in the circumstances.

They keep ringing and hounding her about it. I'm just trying to help her out here because she really doesn't need this stress in her final year of college.

Until the insurance company clarify these items the situation would appear to be at stalement.

Oryx

JHet wrote: »

Agree.

Both parties are partially to blame here. The problem is the insurance company are not co-operating. They are refusing to spread the payments and refusing to admit in writing that she was covered which I feel is highly unreasonable in the circumstances.

She owes them €600 (the full cost of insurance) She has 3 months to pay it. How exactly can they spread it any more than 200pm?

They keep ringing and hounding her about it. I'm just trying to help her out here because she really doesn't need this stress in her final year of college.

Im not on their side, Im trying to see this from the middle. They are owed money. She owes that money for a service that has already been supplied. Any supplier in that instance will phone and ask for payment!

Until the insurance company clarify these items the situation would appear to be at stalement.

So if they clarify she was covered evn though she didnt pay, then hypothetically, she files a claim for that period without further payment, they are doubly stung for a payout on a policy they were never paid for?

If she wants to continue her policy, she needs to get the money to pay it.

Del2005

JHet wrote: »

I agree 100% but they are refusing to play ball stating that they are changing the direct debit mandate and that they want the money now which is unreasonable. I've advised her to cancel the direct debit until they come to a more reasonable arrangement regarding outstanding monies owed. There is joint responsibility here, my sister was in the wrong for not knowing this but the insurance company were also in the wrong for not spotting their mistake earlier and informing her in a timely manner of the error. It went unnoticed for over 6 months. I've also told her that the insurance should provide proof in writing that she was covered during the period the payments were not made. Again they are refusing to do this until full payment is made.

Why does she need proof she was covered? If she was involved in a RTI or stopped by the Gardaí then she would need it. Otherwise what use is it if she gets it?

JHet

Oryx wrote: »

So if they clarify she was covered evn though she didnt pay, then hypothetically, she files a claim for that period without further payment, they are doubly stung for a payout on a policy they were never paid for?

They need to clarify this plain and simply. Why would anyone in their right mind pay for a service that they are not even 100% sure was provided for in the first instance?

What if an accident had of occurred? Can you say with 100% certainty they would have paid out.

dudara

Moved to Banking & Insurance & Pensions

dudara

JHet

dudara wrote: »

Moved to Banking & Insurance & Pensions

dudara

Could you kindly move this back to the original forum please?

Not looking for advice on banking, insurance or pension products thanks. Clearly a consumer issue. :rolleyes:

BuffyBot

Motor Insurance isn't an insurance product? *blink* *blink*

And, no, it's not so clean cut. I think the advice you've been given so far has been not far off the money. Your sister "not being good with money" etc etc doesn't really cut the mustard. As explained there is three months left. They can't really do a loaves and fishes job upon the timeframe, can they?

Redsox Rover

I work for an insurance company and I have to say I am surprised they are doing a payment plan over 12 months. The general rule is to offer 10 months finance so as to ensure the policy is fully paid before expiry.

As for the outstanding balance due, it is written on the finance offer that the provider can change the terms of the direct debit at any point. This can include payment date and amount. Once they have given prior notice to this fact then there is little she can do. Often the finance is handled by an outside party. The insurance company would receive full payment at the beginning of the policy and the risk of non payment falls on the finance company.

Who has underwritten the finance agreement?

Miss Congeniality

Hey OP - I really think that asking the insurance company about the last 6 months cover is kind of a moot point - if she didn't make a claim during that time what does it matter now if she was /or wasn't covered?

What she needs to do now is sort out the remaining months! If she doesn't pay what she owes, I would assume :
(1) she won't be covered for the remaining months - and
(2)this may affect her credit rating.
(3)It could also affect her insurance for next year - as in if she wants to pay it again by monthly direct debit, this company and other companys may not gave her that option as they will see that she didn't pay what she owes for this current year! Or even that she didn't pay it in the year as she was supposed to have done !!!
(4)Also, by holding out on payment, she needs to check on whether she's being charged interest - thus could end up owing more again!!!

I understand that she's a student and doesn't have the money to hand - but she owes it and needs to pay it... what about asking the company to take it so much per week, €50 a week, so its not one big payment of €200 a month???

If she still has no luck there - and if she can't borrow the money, she could get a loan for the money and then spread that loan over how ever many months she wants - but she'd be charged interest on that!!!

While I understand that you think its 50/50, it doesn't solve the problem! The company provided a service/product and require payment. She availed of that service and needs to sort out payment to them.

Best of Luck to her!!

dorkacle

Redsox Rover wrote: »

I work for an insurance company and I have to say I am surprised they are doing a payment plan over 12 months. The general rule is to offer 10 months finance so as to ensure the policy is fully paid before expiry.

Some companies allow it over 12 months for students. I remember doing so with Axa a good while ago.

Miss Congeniality wrote: »

While I understand that you think its 50/50, it doesn't solve the problem! The company provided a service/product and require payment. She availed of that service and needs to sort out payment to them.

I'd be inclined to say pay it myself, but...

You can be damn sure if she did have an accident during this timethe insurance company probably wouldn't have provided cover (or atleast tried not to) on the grounds that there was no payment made. So was she actually provided with a service during this time?

Redsox Rover

I can tell you for certain that without consideration (payment of first instalment) no cover is in place. This clause is in every co tract of insurance. As you do not sign any co tract of insurance, the only way it is enforceable is when a fiscal amount is paid for the service. Without payment an insurance company can cancel Ab Initio (from Inception) without notice. This will affect your credit rating and will also hinder your ability to pay insurance by direct debit in the future. Also if you have a policy cancelled it can be difficult to get another quote from any insurance company.

JHet

Understood. The payments were with certainly over 12mths and she definitely hasn't paid a penny so far. The insurance screwed up the direct debit and took 9mths to realise this. Redsox if what you are saying is right, why should she pay now for a service she wouldn't have received in the event of a claim? It defies logic for me! And why should her credit rating be affected because of the insurance companies cockup?

It seems like some weird paradoxical situation to me.

Lets take another scenario. She hypothetically had an RTA during the 9mths were no direct debits were being taken. Insurance company refuse to pay out on the grounds of no consideration. Should she pay the 9mths on the grounds that's she's contractually obliged?

Redsox Rover

JHet wrote: »

Understood. The payments were with certainly over 12mths and she definitely hasn't paid a penny so far. The insurance screwed up the direct debit and took 9mths to realise this. Redsox if what you are saying is right, why should she pay now for a service she wouldn't have received in the event of a claim? It defies logic for me! And why should her credit rating be affected because of the insurance companies cockup?

It seems like some weird paradoxical situation to me.

Lets take another scenario. She hypothetically had an RTA during the 9mths were no direct debits were being taken. Insurance company refuse to pay out on the grounds of no consideration. Should she pay the 9mths on the grounds that's she's contractually obliged?

To answer the first question: She should pay as she has been recieving the cover for free for the last 9 months. The insurance company would have the right to cancel the policy due to non-payment and avoid paying a claim however they would need to first afford the opportunity of paying the arrears before doing so. Your sister has been fully covered and legally allowed to drive on the roads due to recieving this cover however has not paid any consideration. This is a break of contract. As the error is on the insurance companies side they should be willing to work with your sister. I can tell you 100% if it is with the company i work for we would definitely be open to assist as much as possible. If you would like to pm me the insurance company and i will confirm if it is the company i work for or not.

The second point you raised is a very valid point however any insurance company that has any pride or awareness of its standing within the market will not refuse to pay a claim if the insured has offered to pay the oustanding amount. They legally have every right to refuse payment of the claim and withdraw their offer of insurance due to the breka in contract of no payment being recieved. Insurance is just like any other product. You wouldnt go into a shop and buy your groceries and not pay for it. Insurance is the same. You are paying for a product and if you have not paid why should that product still be valid?

My advise is to work out a payment plan with the insurance company. If she has 3 months left on the finance she should approach the insurance company and request they spread the balance out over the 3 months. Even offer to send 3 post dated cheques for agreed payment dates.

The fact is that both sides have made a mistake here. the insurance company for not collecting th direct debit or noticing it sooner, your sister for not noticing the direc debit was not coming out and not ensuring she kept that money in the account until the policy had ended. There is more than likel a section in the terms and conditions of the finance agreement which will advise that the insurance company can at their discretion change the amount to be debited each month and also change the date of it being due.

Apologies if i have not been much help but just thought it might be good to have a view from the opposing side. I hope it all gets sorted for your sister and as i said having worked in the industry for 10 years i would be surprised if they refused to accomodate her.