Motorists stung by sneaky additional car insurance fees

Auto insurance companies across the UK have been increasingly charging additional fees such as setup, renewal and cancellation fees across the UK in 2021, financial information firm Defaqto warned. In 2016, 14% of policies had a setup fee that motorists paid when they signed on the dotted line. This rose to 44% in 2021. Many of the setup fees were high. In 2021, 10% of policies were charged £ 60 or more, compared to 4% in 2016. The following table shows other examples.

Setup fees

Charge 2016 2021
For free 86% 56%
Less than £ 20 2% 1%
£ 20 to £ 39.99 6% 25%
£ 40 to £ 59.99 2% 8th%
£ 60 or more 4% 10%

Source: Defaqto

Renewal fees

Drivers were also charged a renewal fee if they stayed with the same insurance company for more than a year instead of switching to a competitor. In 2021, 43% of policies contained a renewal fee, compared to 9% in 2016. Drivers again had to pay substantial sums for renewals. In 2021, 8% of policies averaged £ 40 to £ 59.99 compared to 2% in 2016. The table below shows other examples.

Renewal Fee Fees

Charge 2016 2021
For free 91% 57%
Less than £ 20 1% 1%
£ 20 to £ 39.99 6% 26%
£ 40 to £ 59.99 2% 8th%
£ 60 or more 0% 8th%

Source: Defaqto

Cancellation fees

Drivers who canceled their policies within the initial cooling off period were also billed, Defaqto added. In 2021, 51.5% of policies were billed for cancellation. 3% asked for £ 60 or more. In addition, drivers were routinely asked to change their policies once they had driven. Examples of this were adding named drivers, moving to new addresses or changing license plates.

Advice on car insurance

Defaqto stressed that it is important to check what you can be billed for before purchasing a policy. You cannot be surprised then. Such information is often available through terms and conditions, policy documents, or the company’s website. If not, speak to someone on the phone and ask for written confirmation of the charges. Defaqto Insight Consult, Mike Powell, said:

” Take your time choosing a policy and find out exactly what you will be billed for. This will likely be the most time consuming part of the process, but it could be the most important. “

By Stephen Turvil | December 28, 2021

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