Paying for insurance in installments

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Many people pay for German insurance, especially automotive and life insurance in installments to spread the load. Most insurance companies load the premium by 3-5% if the customer pays in such a manner. A Bamburg Court decision from 2006 which has recently been confirmed by the German High Court suggests the practice is illegal. Essentially the insurance companies are providing finance for their product without following the guidelines for such a service, such as declaring the real and effective interest rates on what is essentially a credit agreement.


The Consumer Association in Hamburg have written an article on the issue, and have included a sample letter for individuals to write to their insurance company to reject and reclaim this surcharge, effective from the beginning of the policy. This affects all insurance policies except health, with an annual premium of over €200 per year, so most life and automotive insurances where the customer has chosen to spread the cost will be affected.


It seems that many insurance companies are rejecting claims, offering different reasons, but the Hamburg Association is following progress (they ask you to copy correspondence to them) and in some cases supporting affected consumers with additional legal action. There's no harm in writing the letter if such a situation applies to you, and if the insurance companies relent on the claims you will be at the front of the queue for repayment. It might be that a class action will subsequently be initiated.


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that's a nice post there YorkshireLad, might be really helpful for some people!


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