My car insurance renewed automatically at the end of November. It was with Lloyds TSB the previous year, and I had been told via letters that they were changing to a company called BISL. I could not believe it when my December direct debit came out of my account and, compared to the £40 I'd been paying, it had shot up to a whopping £230.

I called BISL today and yes, apparently my premium has jumped to more than £2,500. I had been sent no correspondence about the change in my premium and was given no chance to refuse such a hefty price. I am a student who has been driving for 10 years without any previous claims and with no traffic convictions.

They offered me a chance to cancel my policy for a £20 administration fee, and said they would refund £80 to my bank account. My question is: were they within their rights to do this, and is there any way I can take this further and get the rest of my money back? AD, Newcastle upon Tyne

For those of you who have never heard of BISL, this company is better known as Budget Insurance, based in Peterborough. It offers insurance directly and also via several other big-name firms which brand it as their own product – including Marks & Spencer.

We asked the company to explain what was going on in your case. It said that upon investigation, it appears that your premium was much higher than it should have been due to a "very unusual administrative error" – one, it says, it has since taken steps to resolve.

It said you were sent a renewal notice letter on 1 November and a welcome pack on 27 November confirming the higher premium.

"Unfortunately it would appear that AD didn't receive these letters, although they were sent to the correct address. We have now contacted AD to offer our apologies and compensation, and are pleased to confirm that the issue has now been resolved to his satisfaction," it said.

The company said a wrongly named young driver on the policy, who should have been removed, had caused the premium increase. You have since moved to another car insurer.

Meanwhile, other Lloyds TSB car insurance customers should probably dig out their paperwork to make sure something similar – possibly on a smaller scale – hasn't happened to them, too.

In such circumstances it is always worth remembering that the direct debit guarantee is there to protect you from firms putting through unjustified amounts. AD could have contacted his bank to demand that it put the £230 straight back in his account.

We welcome letters but cannot answer individually. Email us at consumer.champions@theguardian.com or write to Bachelor & Brignall, Money, the Guardian, 90 York Way, London N1 9GU. Please include a daytime phone number