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No they cannot charge you for this now.
What would have happened is that if you had a claim they would not have honoured it and so you were essentially living there without insurance. But that doesn't mean they can charge you more.In fact if you ask the what would have happened had you had a fire and ask if all you would have had to have done is then pay the back charge and the they would have covered you and the answer is no. That would not have worked so there is just no basis for them charging you this now.
It won't be considered to be a theft by the police.
But you should report this to the bank. Tell the bank and show them in fact that you signed that authorized the insurance company to take out the funds and make it clear that they were not permitted to take out this other payment and did this without consent and your position is that this was fraud and you want the bank to return the funds to your account.
Then if that doesn't work I do suggest you go to the insurance ombudsman.
And if that doesn't work I suggest you sue the insurance company in Small Claims Court and self-represent.