Refunds After Changing Auto Insurance Companies

[Surfy]

Sold an auto policy to a guy last week. Saved him about $160.00 a year. He was real happy. He had one more month left on his AAA auto insurance (about $48.00) so he goes to the local office and they would not let him cancel his insurance without charging him over $90.00.

Anyway, I cancelled the sale but it will automatically be re-instated middle of September when his AAA insurance runs out. I still get the sale...just next month instead of now.

But, $90.00 to cancel a policy? That seems like way too much.

My questions are: How much can a company legally charge to let a policy holder out of his car insurance?

How much does your agency charge when someone wants to cancel and how much pressure do you use to keep them?

What are some tips or something we can say if our client has many months left on his existing auto policy? Certainly, we are not going to wait until his renewal comes due every time.

Surfy

 

[xcslx]

Ooh, good question, I would like to know as well...

 

[Carlos Gil]

It depends on the carrier you place them with.

Most carriers will return the prorated premium.

Some may charge a cancellation fee as they provided discounts based on the client keeping the policy for the full term.

They can charge as much as the like as long as it was properly disclosed.

You must do your homework and know what the cancellation terms are for your carriers and for the competition. We use this as a selling tool to dissuade our clients from certain carriers. Or in cases where we know the client is not keeping the policy for the full term.

 

[Bertolinoins]

I know a lot of people make good money selling auto only and even non standard... but this type of client is a service nightmare. A client that will go to the trouble of a mid term move to save $13 per month is not a client I want to deal with.

 

[Carlos Gil]

I know a lot of people make good money selling auto only and even non standard... but this type of client is a service nightmare. A client that will go to the trouble of a mid term move to save $13 per month is not a client I want to deal with.

That is the beauty of doing business in CA, as we have broker fees to cover the additional work involved.

 

[djs]

I think he misunderstood. I don't think AAA in California charges a cancellation fee (but I could be wrong on this entirely, things change, they used to not charge one).

AAA bills in arrears, rather than forward. He likely had a balance due with the cancellation for insurance provided, not a cancellation fee. Again, this knowledge is YEARS old and may have changed.

Of course, AAA has about the funkiest billing system going. Never understood why you can't take a premium, divide by 12, and come up with a payment. They have a unique method.

Nope, never worked for AAA, but I was insured by them for a while.

Dan

 

[Bertolinoins]

That is the beauty of doing business in CA, as we have broker fees to cover the additional work involved.

True... but I am seeing non standard shops (Dashers, Titan, etc) that don't charge broker fees. I know there are a million different business models and that is one of them... but it seems like you are running on a treadmill without really growing.

 

[amctyre]

I'm all too familiar with this! It's ridiculous how some of these insurance carriers tack on all these extra fees. The auto insurance agency I work for charges a $75 service fee if the policy is voluntarily cancelled before the end of the policy term.

As was said before, you just have to know the rules of the carrier, because they have the right to pretty much charge what they want. But be careful of using those facts to dissuade people from leaving. That is a borderline ethical issue in some states - whether its a true statement or not, you shouldn't put down another insurance company

 

[GreenSky]

I would think that pre-paid legal would come in handy suing the agency for the $75 charge.

Rick