Some Direct Line customers that cancelled policies mid-term could be owed money after a system error miscalculated refunds between 2005 and 2011.
If you've cancelled a car insurance policy with Direct Line or one of its associated brands, you could be due a refund.
That's because a system error, which occurred between 2005 and 2011, meant that the amount refunded back to customers that chose to cancel their cover mid-term was miscalculated.
Normally when you cancel a car insurance policy mid-term, you're entitled to get back the premiums you have paid, minus a charge for the number of days you received cover, as well as an administration fee.
But a Direct Line system error, which occurred between 2005 and 2011, meant some customers were not refunded the correct amount.
Direct Line found the error in its internal systems during an audit in 2011 and informed the Financial Conduct Authority (FCA).
The glitch has since been fixed and Direct Line has been working with the FCA to ensure those impacted are informed and refunded correctly.
A Direct Line Group spokesperson said: "Due to a system error, a number of customers who cancelled their car insurance policy mid-term received incorrect refunds. We are currently contacting affected customers to advise them of the arrangements for refunding the money owed to them."
Who is eligible?
If you were a customer of Direct Line, or one of the brands associated with the group between 2005 and 2011, and cancelled a car insurance policy and/or additional linked products like breakdown cover or motor legal protection, you might be in-line for a refund.
Associated brands include Churchill, Tesco Personal Finance, Privilege, Brand Partners, Virgin, Pearl and Egg.
It's not clear how many past or present customers are affected, but Direct Line says only a small number of car insurance customers cancel mid-term, and of these people a "small amount" were impacted.
Customers who paid for their policy monthly or annually are eligible for a pay-out.
However, if you made a claim on the policy, or a claim was made against you, you won't be eligible for a refund, even if you cancelled mid-way through.
How to claim compensation
Customers impacted by the system error should get a pay-out of around £35.
The refund will include interest at 8% calculated per year on a pro-rata monthly basis.
Direct Line says it has been sending letters to customers hit by the system error and the final batch are due to go out in the next few weeks.
The money you get will be sent in the post by cheque and should arrive 10 to 20 days after your first letter about the refund.
If you don't receive a letter, but think you should have, dig out the documents with the policy number you cancelled and get in touch with Direct Line on 0845 246 6315.
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