insurance company liquidation, will have to pay double

[Grohlette]

My hubby is a black cabbie, so has public liability insurance. He took out a policy in June, and opted to make monthly payments. He signed a deal where the first month was £240 then 9x £120 monthly payments are due and then it is paid out for the year. We were informed about a month ago that the insurance firm is liquidating, but to do nothing as of yet and wait to be informed as to what the next step is. We had a phone call today to inform us that the he will be insured until 26th Oct. They can recommend another insurance firm who will give him the same deal that he has now. However because he took the pay monthly option he still has to continue paying the £120 a month for the original policy until the end of the contracted period because the policy has been paid in full by a loan company and our agreements are for payments to the loan company and not the insurance company. So he will have to pay the rest of the existing 'loan' and pay for new insurance on top. They advised we may get some of the money back but I realise that we might not. It feels like we should stop paying, but were informed today that we would have debt collectors involved if we just stopped paying. Has anyone experienced anything like this, and is there anything we can do to get out of this, as paying double is going to cripple us

[HereIAm20]

Surely the case will be that if he cancelled the insurance he would be entitled to a refund (less an administration fee) of his premium.

I think this is still the case but they are pulling a fast one. Was the loan direct between your husband or an arrangement the insurance company had with the loan company? I suspect the latter and it would seem they are trying to protect their business partner.

Also is it a business insurance or for an individual because if acting as a Consumer then your husband may have rights under Consumer Credit protection. Maybe try MSE forum?

[Cabrinha]

Sadly not pulling a fast one.
I used to work in a company doing credit checks on behalf of insurance finance companies. Sometimes the customer would sell their car and think they could just stop paying - they can't, the contract is with the insurance finance company, not the insurance company. The two can be completely unrelated. The finance company have already paid the insurance cost in full to the insurance company that is now in liquidation.

[PaulDacreCuntyMcCuntFace]

They aren't pulling a fast one - your DH has entered into a credit agreement for the payment of the premium. By the sounds of it:

He's taken out an annual policy with ABC Insurance Co.
He's signed a credit agreement to pay the premium for his insurance over 12 months. The credit agreement will have been with a different company - 123 Credit.
123 credit has paid the full premium to ABC Insurance and your DH is repaying what he owes 123 over the course of 12 months.

Hopefully this all makes sense so far?

The issue you have is that ABC Insurance is now in liquidation. This means that they basically have no money and can't afford to pay claims or keep going. So even if you cancel your policy they don't have any money to pay you a refund. The problem is that you still owe 123 credit money, so you have to keep paying them because that's the agreement that you signed.

The absolutely critical lesson here is ALWAYS make sure that you use a rated insurer. Go through a reputable insurance broker, as they will make sure that they place your cover with a reliable, credit rated company - for exactly this reason. It's also worth trying to make sure that if you decide to pay your premium by monthly instalments, that you do it directly with the insurance company rather than using a third party firm - again for exactly this reason.