If you’ve renewed your home or motor insurance policy with Direct Line, Churchill or Privilege insurance, you could be in line for a refund as it’s now come to light that some customers may have been overcharged.
Here’s what’s happened and how to get your money back.
The cost of motor insurance has risen by over 43% within the past year, according to the Office for National Statistics, with the average policy price now over £500, according to the Association of British Insurers.
This means many motorists, along with home insurance customers, (who have also seen increased prices), are facing a double whammy, having to dig deep to cover higher prices. And in some cases, they’ve been overcharged for their policy.
How has Direct Line been overcharging some customers?
The Direct Line Group covers several brands, including Direct Line, Churchill and Privilege. And it’s been discovered that customers who renewed policies with one of these three brands may have been overcharged and are now due a partial refund.
This stems from new rules that were introduced by the Financial Conduct Authority, (FCA), from 1 January 2022, known as Gipps, (General Insurance Pricing Practices).
These rules were introduced to put an end to the loyalty penalty, where new customers had often been given cheaper home and motor insurance deals at the expense of existing customers.
Since 1 January 2022, insurers have been banned from hiking up policy prices for loyal existing customers. Which should mean a more level playing field when it comes to policy pricing.
However, according to Direct Line Group, a mistake occurred when introducing these rules across its three brands. This means some customers who renewed their policies paid more than they should have done.
The FCA, who enforce the Gipps rules said, “Direct Line Group has agreed a voluntary requirement, having charged some existing home and motor customers more for their renewal than they would have done if they were a new customer”.
As a result, Direct Line Group is currently carrying out a review to identify cases where customers have been overcharged.
“Customers do not need to do anything themselves at this stage. Direct Line Group will be contacting affected customers directly”.
How will I know if I’m due a refund?
If you’re due a refund, your insurer should contact you. However, it’s not clear how many Direct Line, Churchill or Privilege customers may be affected.
If you are still with one of these three insurers and due a refund, Direct Line should automatically get in touch with you. Any refund due should also be made directly to your bank account, or by cheque if Direct Line doesn’t have your bank details.
Anyone who’s since switched insurers and is owed a refund for a past policy with one of the Direct Line brands will also be contacted.
There’s no fixed timeframe as to how long it will take to contact or refund customers, although Direct Line says it is already in the process of doing this.
If you think you are due a refund and aren’t contacted, you can always get in touch with the relevant insurance company directly.
And in the event you’ve moved house or changed your contact details and had a motor or home policy with Churchill, Direct Line or Privilege, since January 2022, it’s worth contacting them to pass on your new details.
How much will my refund be?
Direct Line Group says it expects the cost of reimbursing customers to be around £30 million.
However, as insurance policies are calculated on an individual basis rather than fixed cost, it’s hard to say how much the average refund will be.
If you are contacted about a refund, you can expect to get the difference between the price you paid and the price you should have been charged, along with an additional 8% interest.