# Motor Insurance "Administration Fees"



## WhichOne'sPink?

Long story short:

I've just taken out a Motor insurance policy on a van, I receved the details through the post today and I've been charged a £100.00 "Administration Fee" :doublesho

Can the guys from Coversure tell me if this is the norm or have I just been schooled? 

Also, do I need "personal Accident" cover?

Cheers,

Andy.


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## Markyt001

£100.00 wtf!!!


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## R7KY D

I'd ask them to justify it , That is far beyond reasonable , And write to the insurance ombudsman it won't cost you nothing and let them deal with it for you


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## Shiny

Well put it this way, our normal admin fee on a motor policy is £10! But being a commercial broker, we are a bit old fashioned. 

£100 is excessive in my opinion, but was it still the cheapest quote even taking into account the fee? 

Most motor policies include some basic PA cover for loss of limb or death etc. but in 25 years I never seen a PA claim under a motor policy. Personally I wouldn't pay extra for the cover if it wasn't already part of the cover, but it is up to you on that score.


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## Shiny

Sorry just seen it was a van, in which case PA cover may not be an automatic cover. If you are concerned about PA cover, take out a proper pa policy with 24hr cover, any occupation basis etc



R7KY D said:


> I'd ask them to justify it , That is far beyond reasonable , And write to the insurance ombudsman it won't cost you nothing and let them deal with it for you


That won't make any difference. A broker can actually charge what they want on new business, but they have to be transparent in their charges. The fee should have been detailed in the quote before taking up the cover and therefore acceptance of the quote is acceptance of the new business fee.


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## Shiny

Also you will have a toba from the broker that will detail their other admin fees. If they are charging £100 a pop regardless, you will get this everytime you make an adjustment to the policy. I doubt they will to be honest, but still check the toba to see where you stand.


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## WhichOne'sPink?

Shiny said:


> Well put it this way, our normal admin fee on a motor policy is £10! But being a commercial broker, we are a bit old fashioned.
> 
> £100 is excessive in my opinion, but was it still the cheapest quote even taking into account the fee?
> 
> Most motor policies include some basic PA cover for loss of limb or death etc. but in 25 years I never seen a PA claim under a motor policy. Personally I wouldn't pay extra for the cover if it wasn't already part of the cover, but it is up to you on that score.


Yes, it was the cheapest quote, I just feel half an hour on the phone to them doesn't really warrant a £100 fee. Going by your information it seems I've been had, so I shall call them tomorrow and ask them to try there best to justify it.

Would I be better off getting the PA cover cancelled? I assume because it's within the 14 day "cooling off" period I wont be charged to cancel?


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## Shiny

You might be cutting your nose off to spite your face. Would you rather pay £300 total including a £100 admin fee or £400 elsewhere that only has a £10 admin fee?

You should hopefully be able to cancel the pa cover. 

If you cancel the whole policy within 14 days, there will be a pro-rata charge made by the insurers for the time on risk, plus an admin fee for "reasonable" costs by the broker. This should be in the toba. Be careful though, I have some brokers try to also charge their full commission and even state it in their toba. This is against the FSA ICOBS as commission does not reflect a reasonable admin fee. They will still try to charge it though and you will have a fight on your hands.


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## Shiny

Did they confirm the admin cost to you before you took out the policy?


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## WhichOne'sPink?

Shiny said:


> You might be cutting your nose off to spite your face. Would you rather pay £300 total including a £100 admin fee or £400 elsewhere that only has a £10 admin fee?
> 
> You should hopefully be able to cancel the pa cover.
> 
> If you cancel the whole policy within 14 days, there will be a pro-rata charge made by the insurers for the time on risk, plus an admin fee for "reasonable" costs by the broker. This should be in the toba. Be careful though, I have some brokers try to also charge their full commission and even state it in their toba. This is against the FSA ICOBS as commission does not reflect a reasonable admin fee. They will still try to charge it though and you will have a fight on your hands.


What is this "pro-rata" charge likely to be? I only plan on cancelling the PA part of the policy and I thought, from the terms of business, that I would get a full refund as it says, "you may cancel the policy within 14 days of conclusion of the contract or of the day on which you receive the policy document if this is later, and provided you have not made, or intend to make, a claim on this policy you are entitled to a full premium refund. To exercise your right to cancel, contact the broker who arranged this cover for you."


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## WhichOne'sPink?

Shiny said:


> Did they confirm the admin cost to you before you took out the policy?


Well, it was a surprise to me when I read the letter, put it that way. :doublesho


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## Shiny

Normally within cooling off you will get charged by the insurers for the cover you have had, so if you have been on cover for 3 days, you get charged 3/365ths. A full refund is a fine alternative though. 

I would think you will be fine to cancel the PA cover without any problem if it is an "add on" cost.


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## PG Monkey

The Financial Ombudsman Service says administration and cancellation fees, "have to reflect the cost to firms."


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## Shiny

I don't think that is right, the fsa ICOBS states that fees must be disclosed. In the case of commercial insurance, it is common for some brokers to charge a fee based on the % of premium, especially if nett rated, and the size of premium does not always reflect the amount of admin. 

In the event of cancellation within cooling off period, the yes, the fee must reflect the cost to the broker in respect of admin fees, ie not profit from it. But this is different to a new business fee such as is being questioned here.


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## WhichOne'sPink?

I've just got off the phone to them and they've refunded the PA cover and key cover as well. It was explained to me that as they are a broker the commission they get is very small on some premiums and this Admin fee was to make up for that. If that is the case how can they say it is an "administration" fee? Surely that makes it commission?

As a side note, what's the benefits of "legal Assistance" cover? As far as I'm aware all this does is repay your excess if you make a claim, but I don't plan on making a claim so I'd rather keep the money now?


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## Shiny

A commission is paid by the insurers to the broker. 

Some policies have low commission, some are even nett rated and have no commission, so the broker receives little or no money from the insurers. Any charge made by brokers has to be called a fee, even though effectively it may represent a commission. 

In this case, it wont do you any harm to ask what their commission is to see if it is genuinely low or if you are being fobbed off. Our motor commission ranges from 10% to I think 13% at best and we usually charge a £10 fee on this. If we had a 5% commission rate for some reason, we would probably charge a fee equivalent to 5% of the premium plus £10 normal fee. 

Personally I would take out the legal expenses/uninsured loss recovery. It is for when you are hit by someone and it is not your fault. They should pursue a claim on your behalf for any uninsured costs such as your excess, additional travel costs, possibly provide you with a credit hire replacement vehicle, recover loss of earnings and any injury claims. There should also be something like £25k or £50k of legal costs should it need to go to court.


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## WhichOne'sPink?

Shiny said:


> Personally I would take out the legal expenses/uninsured loss recovery. It is for when you are hit by someone and it is not your fault. They should pursue a claim on your behalf for any uninsured costs such as your excess, additional travel costs, possibly provide you with a credit hire replacement vehicle, recover loss of earnings and any injury claims. There should also be something like £25k or £50k of legal costs should it need to go to court.


So the other parties insurance is liable to pay me back my excess if I am hit? (And vice versa?)


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## Shiny

Even if an accident is not your fault, you are still required to pay the policy excess. You will need to recover this from the other persons insurers. If you have legal expenses cover it just makes the whole process a lot easier.


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