changing house insurance - advice/information required please.

We were insured with Zurich which was initially set up with the bank when we took our mortgage out 4 years ago.

We have read this thread and found a cheaper insurance with enough cover and have now accepted this as our Zurich policy ran out on 2/4/11.

I have informed the bank that we did not want to renew with Zurich and we have not got enough money in our account to pay for a renewal.

Our bank have now told us that they have already renewed our policy, or it is renewed automaticaly, despite not having enough money in our account to do this and without our knowledge.  They also told us that it is Spanish law that  we have to give 2 months notice if we do not want to renew it.

Can anyone give me any information and advice on this please.

Many thanks

Hi - I had the same thing last year.  They don't send any renewal papers and they renew automatically if you don't cancel 2 months before the due date - incredible!  I was stuck with my insurers for an extra year and put a note in my diary to cancel this year - which I have now done.  I had to cancel my new insurance and stay with the old one. I feel this is totally anti-competitive and needs to be challenged.

Although the insurers are entitled to insist on renewal, I would have thought you were entitled to cancel a Direct Debit and reclaim the money from the bank - within a certain time scale.  Perhaps we could have a legal opinion from someone on the forum?

Hi,

It is true to say that 2 months is the legal requirement to give notice on cancellation of an insurance policy, and unless you say otherwise all policies will be automatically renewed, normally without being informed of your renwal premium!  The insurance co that I work with informed me that by law you have 60 days to reject the payment and that most people just put a stop on the direct debit with their bank. You will probably receive several letters from the insurance company saying that your policy is active (en vigor) but suspended awaiting payment but after 90 days the policy is automatically cancelled. They tell me there is never any repercussions as the insurance companies do not have the time, manpower nor inclination to effect the 'law'! I would recommend giving the 2 months notice where possible but I have experienced people cancelling direct debits and rejecting payments from various insurance companies and as far as I know no action has been taken against them.

our property insurance is due next month so we also found a cheaper

and better policy.

we went to the bank to cancel the direct debit last month and the girl at

the bank advised us to send a letter staright away to cancel the policy as

2 months notice is required, this we have done and also sent the letter by

the spanish equivilant of recorded delivery.

now we will wait to see what the old company does as they have not

acknowledged receipt of our letter but we have kept the delivery receipt so

we know they have received it.

will wait to see what happens.

I am confused, if there is no money in the account than the bank cannot pay for it and it will end up cancelling itself due to lack of payment.

One thing for sure is you do need to warn them at least 30 days before policy expires, then again they should also warn you to make sure that there will be funds in the accuont.

Be carefull with this as depending on the mortgage conditions if you cancel your insurance it may make your mortgage payments rise, many banks make you take on the insurances and link them to the mortgage conditions, check with them.

Joan

Joan raises a good point re the mortgage factor; if your mortgage was a discounted product then the mortgage deed will state the rate as being conditional on your having their insurance, therefore by canceling the insurance element it would be changing the conditions of your mortgage.  If you do not have a discounted mortgage and change your insurance provider you are required to send the new policy document issued by your new insurer to your lender to prove cover - your lender is the interested party and must be showing on the policy document including mortgage account number.

 Joan, in normal circumstances if there is no money in the account to pay for direct debit charge, the Bank will return the charge unpaid and the policy would be cancelled after three months for lack of payment.

However the Bank can pay the charge and debit the account which will then show a balance due to the Bank and you have to be careful because interest will accrue on the negative balance.  The Bank should inform the client to make sure the client accepts this but when you are dealing with the insurance policy that covers a mortgaged property, it is to the Bank's benefit to make sure the insurance is not cancelled and usually the obligation signed by the client to have the property insured is sufficient for the Bank to make the payment and collect from the client afterwards.

This does not mean that if the client brings the new insurance policy to the bank and does so within the legal timeframe, the Bank can reverse the debit charge and accept the new policy and fulfillment of the client's obligation to have a policy on the property.

we have found out today that the bank have paid the insurance and given us "an overdraft" which we did not ask for and do not want.

I am astounded that the bank can do this without our knowledge and consent as this puts us in debt to them and interset is then added.

I am sending the new policy by email and hope that the bank will accept this and refund the money so that we are not in debt.

thanks for all your advice as we were not aware of the legal implications of giving 2 months notice of cancelation.

What you can also do is fax the bank and ask them to cancel the payment made to the insurance company, they can not refuse to do this, they can not force an overdraft on you. 

Joan