Car insurance quote news
30/07/2008
Policies sold cheap are cancelled by insurer
A car insurance quote error has led to one of the UK's largest motor insurers being fined £735,000 after cancelling over 4,500 policies that had been sold too cheaply.
Hastings Direct was found to have treated its customers unfairly by the Financial Services Authority (FSA).
An FSA spokesperson said, "[Hastings Direct] focused on the financial cost to itself and did not properly consider the detrimental effect on customers."
The policies in question, sold between July and September 2007, were offered to customers significantly under priced; in some cases by over £500. A software problem is believed to be the cause of the mistakes.
Hastings has now agreed to contact affected customers and advise them that they may be able to claim compensation. The FSA said the fine awarded to Hastings Direct would have been £1m if they had not agreed to settle the case.
Customers who had their policy cancelled had to arrange alternative cover at extremely short notice and there was genuine risk that some policyholders may have been left un-insured before they were able to arrange alternative cover.
A further problem has been that some customers may receive higher car insurance quotes for their new premium as they are required to declare that their previous policy was cancelled.
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