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Does it pay to be honest? Why do insurance companies charge sucha premium to alter policies?

PUBLISHED: 16:00 15 August 2014 | UPDATED: 16:00 15 August 2014

Why do insurance companies charge for minor amendments?

Why do insurance companies charge for minor amendments?

Dean Mitchell

Wouldn't it be great to feel that we lived in a world where the primary motive of many companies was not to rip us off?

It would be bad enough if it was only companies we could choose to avoid that were trying to get one over on us - you know those selling items we could well do without, like age-defying anti-wrinkle serums or cars that, according to the TV adverts anyway, don’t just get you from A to B but also improve every aspect of your life.

But no. Many of the worst offenders when it comes to pulling a fast one on consumers work in sectors we cannot avoid.

I’m talking utility companies that offer preferential rates to new customers. Firms that will put you through to a smiley UK call handler if they’re trying to get your business but if they already have it direct you to a worker on the other side of the world who barely speaks English.

And I’m talking insurance companies that levy charges for making minor administrative changes to policies and apply hefty cancellation charges if you actually no longer need a policy at all.

It never used to be like this. Time was that you could phone up to cancel an insurance policy and, if you had paid in full for a year, you might even be due a partial refund.

Naive fool that I was I thought this was still how it was. I didn’t realise the natural order had changed. I didn’t realise that commonsense and fairness in customer relations had been replaced by a cartel of coporate greed. It’s like waking up to find that the world has started spinning backwards for no reason other than than it can.

I found out about this new insurance world order when I phoned one company to cancel a policy on a scrapped car.

“That’s £50 to cancel and charges still owed of £25,” the man on the other end of the phone informed me.

“All insurance companies do it these days,” he said, as if that explained everything.

It was the same story when I tried to swap the existing main and named drivers around on a policy relating to a second car.

“There’s a charge of £30 for that,” the girl in the call centre told me after she’d hit a couple of computer keys to make the change.

“Why?,” I asked. “It’s taken you a second to do and I’ve only phoned up to tell you because I’m trying to be honest. Now you’re penalising me for it.”

“Ok,” she relented. “Out of the goodness of my heart I’ll reduce the charge to £15.”

I perhaps should have argued on. A collegue told me an insurance company tried to charge her when she rang to tell them she’d married and changed her name. They relented when she demanded to speak to the call handler’s manager.

It all gives the term ‘insurance scam’ a whole new meaning.

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