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Car Insurance company charging a cancellation fee

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Blades_fan | 22:50 Sun 06th Sep 2009 | Law
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Up until 24 July 2009 I had car insurance from Elephant.com,I got a better quote from Direct Line before the renewal date. The credit card number that Elephant had on their database had expired,so as I knew they couldn\'t renew my policy automatically I didn\'t bother ringing them to cancel the car insurance.
Elephant then sent me a new certificate of insurance and they later wrote to me to tell me that they couldn\'t take the funds from my credit card.
I e-mailed them to tell them that I\'d got a better quote from Direct Line and that I didn\'t want their insurance.
Elephant then e-mailed me back asking me to send the new certificate back (which I did) and they advised me that I would be charged a £22.50 cancellation fee.
To start with I wasn\'t bothered as I knew they couldn\'t charge it to my obsolete credit card,but they have since written to me telling me that if I don\'t pay it within 7 days it will be passed to a debt collector who will add an extra £20.00 fee.
I know it\'s an old cliche,but it\'s not the money it\'s the principle,can they do this?
Thanks in advance for any help.

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I would say they are on a sticky wicket. You did not ask them to renew the insurance, you have not paid them and they did not deduct any funds so I can't see how they can claim to have incurred any expenses nor that a contract was entered into. If they want to offer cover without ensuring you have paid for it that is their mistake. I would ask them what would they have done had you made a claim whilst not actually having paid anything for the cover they provided.
Yes they can. When you first took out the policy there would have been, in the small print, confirmation that the insurance would be rolling (renewed) unless you expressly informed them you wanted to cancel it. You will have signed the policy agreeing to this, or allowed the policy to continue giving implied consent.
I don't see why you are objecting. It doesn't take a lot of effort on your part to inform the insurance company you are going elsewhere, and receiving the policy should have been a reminder to do so.
Don't forget Elephant may be charged by their bank for the failed payment, and they are not psychic.
Didn't you have to get confirmation of no claims discount from them for Direct Line?
The relevant section is to be found on page 24 of your policy booklet...

"At renewal

In order to offer you continuous cover on your policy, EUI Limited will arrange for your policy to be automatically renewed...

You may... opt out of automatic renewal at any time by contacting our Customer Service department."

http://www.elephant.co.uk/policyDocs/elePdf6.pdf
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But am I expected to trawl through the entire small print of the policy booklet to find the relevant paragraph.

I'm a BT engineer not John Mortimer.
In short, yes - you are expected to acquaint yourself with the conditions of any contract into which you enter; to do otherwise is sheer folly. And the policy booklet is produced in 'normal sized' print.

But this is all a distraction from the real point. You were obviously aware that the insurer would attempt to renew the policy and erroneously thought that upon failure to obtain funds from the extinct credit card they would write off the newly incurred debt. A simple email/phonecall to inform them of your intention not to renew would have saved all this hassle.

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