The hidden car insurance costs and how to avoid them
Financial information business Defaqto found that 72% of the 329 car insurance products it analysed applied an adjustment fee, which is typically charged if a policy is amended. For example, if another driver is added.
Some 80% of products included a cancellation fee if the driver chooses to cancel their policy after an initial cooling off period. In close to two thirds of cases, the cancellation fee stood at £40 or more.
Meanwhile 36% of products had a ‘setup’ fee, which is included within the overall premium quoted by the insurance provider, and 32% of car insurance products applied a fee at renewal. This is quoted within the renewal premium.
Mike Powell, insight consultant at Defaqto, said: “The growth of price comparison websites means consumers can now easily compare numerous products based on the premium charged and cover provided.
“However, while you are able to compare the overall price, any fees charged by the insurance provider or are payable when you make a change or cancel your policy are not always immediately clear.”
How to avoid hidden charges
- If you think you will need to make a change to your policy, make sure that you are aware of any fees that are payable before you purchase cover. You can do this by searching for the insurance provider’s ‘Terms of Business’, which will state all fees that are charged.
- Some insurance providers will include details of the fees charged as part of their online quotation process. Click on the link available and take a screen shot for your own reference.
- If you are still unsure of the fees charged, speak to the insurance provider and ask them to confirm their fees before you purchase the policy.