Oh, the problems of not opening one's mail - auto insurance edition
July 25, 2014 10:30 PM   Subscribe

We've been paying insurance for a car we traded in to a dealer three years ago. At the time, the dealer gave us the plates for our new car and contacted our insurance agent for us. How do we get this refund?

Massachusetts, with an insurance agent. Auto insurance is deducted via automatic withdrawal.

We traded in a financed car to a dealer for a new lease in 2011, and then traded in that 2011 lease for a new lease a few months ago. Fortuitously, I actually opened the mail from the insurance company to gloat over how much money we'd be saving. As I read through the binder, I reviewed what I thought was our history of cars insured, and then thought it odd that one was missing. It then dawned on me that the 4 cars listed were not historical, but currently insured. We only possess 2 - one financed and one insured.

I called our insurance agent to ask him to remove the leased vehicle we had just traded in to a dealer - only 2 months or so of unneeded insurance. I also asked him to help us sort out the 3 years (!) of insurance payments on financed vehicle we traded in to a dealer in 2011. I figure it's about $3k of payments to the insurance company after the trade.

We faxed the 2011 MA RMV plate cancellation receipt to our agent after a conversation, and haven't heard anything back yet - it's been about a week. I have no idea if we ever actually told the agent at the time to remove said car from our insurance. And as I mentioned, being an idjit, anytime I looked at our binder in the intervening years, I assumed I was looking at a historical car list.

Question being: Will we have to fight for a refund of insurance payments made for a car we no longer possessed and could not have been a liability to our insurance company? Will our local insurance agent have to bear the brunt of this? Is it too early to lawyer up?
posted by heigh-hothederryo to Work & Money (7 answers total) 1 user marked this as a favorite
Response by poster: Urgh. We only possess 2 - one financed and one leased. Both insured.
posted by heigh-hothederryo at 10:31 PM on July 25, 2014

This strikes me as a customer service issue, and not a lawyer issue, in that whether/how easily you get a refund will depend on several judgment calls of whoever you talk to. Explain the situation, emphasize that it was your mistake, don't mention lawyers, and offer to provide any documentation you can think of that might help. For example, the plate cancellation is a start, but do you have documentation from the dealer on the trade-in? If you pay state/local property taxes on the car, can you provide tax records proving that you didn't deduct taxes on the car in question for the years since the trade in? Does a Carfax report turn up anything useful, such as the dealer selling the car to someone else after you returned it?

I doubt a plate cancellation receipt will be enough. Good luck!
posted by deadweightloss at 4:22 AM on July 26, 2014

I doubt you are going to get any refund. Most auto insurance is written six months at a time, which means that you have received half a dozen notices telling you that your policy is being written for specific vehicles.

> At the time, the dealer gave us the plates for our new car and contacted our insurance agent for us.

The dealer does this as a convenience to start new coverage. He has no responsibility to ask the agent to discontinue old coverage.
posted by yclipse at 5:57 AM on July 26, 2014 [3 favorites]

Response by poster: We have all the documentation, including contract with trade-in details, tax returns, etc.

"The dealer does this as a convenience to start new coverage. He has no responsibility to ask the agent to discontinue old coverage."

I hear you. And all those fees one pays the dealer don't really get one much, I know. The new insurance started with the trade-in of the previous vehicle. So, we trade in vehicle A for vehicle C. Dealer contacts insurance to help us start new coverage on Vehicle C, and because it's a lease, we receive new plates and turn in the old. Insurance cos/agents in MA issue plates - why bother with plate cancellation at all?
posted by heigh-hothederryo at 8:40 AM on July 26, 2014

Response by poster: (Not threadsitting, but I'm getting the sense this is a question very specific to Massachusetts, where we all have independent insurance agents, and the RMV is closely linked in to the insurance agent and company networks.)
posted by heigh-hothederryo at 8:58 AM on July 26, 2014 [1 favorite]

Stay on your agent about getting a refund -- explicitly getting a refund, not just removing the car from your policy.

The thing about insurance is that you generally can't insure something that doesn't belong to you. It's against the rules, against the policy, possibly against state law. If no claims were paid on that insurance on that vehicle since the time you parted ways with the car, the insurance company isn't out anything, and potentially gained interest on that money sitting in their reserves.

So, provide proof you don't own the car anymore, apologize profusely, but point out that you couldn't possibly insure a car that didn't even belong to you at that time. Since you don't even really remember what went on when you traded in that oldest car, don't immediately assume you didn't contact somebody about cancelling the insurance. Things get missed on both ends. The agent should be on your side, and if not try somebody else. You were paying the insurance company for a product that you couldn't partake in, so you should get a refund.
posted by AzraelBrown at 10:40 AM on July 26, 2014 [2 favorites]

We were able to solve a similar situation, although timescales were a little different. It involved signing an affidavit that we wouldn't make a claim relating to that period, and that we would indemnify the insurance company against third party claims arising relating to that period. So it may not be impossible.
posted by blue_wardrobe at 4:20 PM on July 27, 2014

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