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Insurance firms rinsing drivers

Patrick Christys
Oct 25, 2019


An investigation has revealed that insurance firms are rinsing customers for hundreds of pounds if they need a policy at short notice.

Companies are charging people up to a third more if they try to get a new policy within a week of their existing one running out, according to a study by This Is Money.

Their report states that this can affect anyone, from a customer who has bought a vehicle that day and needs to drive it home, to those who leave it late to shop around to avoid the so-called 'loyalty penalty', which sees insurers punish loyal policyholders by offering the best deals only to new customers. 

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Those in these positions have no choice but to pay the extra charge - and evidence suggests that the practice is now spreading to other forms of insurance besides just car insurance. 

This is Money ran two separate searches on a price comparison site for comprehensive insurance on a 1.6 litre 2015 Ford Fiesta, one of which started cover from the day of the search and one of which started cover the following week.

Both searches were for the same driver and the same car - all the details were identical, except for the start date of the cover. 

We found that insurers charged on average 10.3 per cent more for identical policies if you need to be covered from the day of the quote, rather than the following week. 

Within this, however, price difference varied dramatically, with some insurers adding no extra charge and others adding up to a third more.

Acorn, Adrian Flux, Insurance Factory and Sterling Insurance were among the nine insurers from the 68 compared which did not add any extra charge, while popular brands like More Than added an extra 33.4 per cent, Churchill an extra 27.7 per cent, Debenhams 22.7 per cent and Axa 21.4 per cent. 

Sheila's Wheels and Hastings both charged over 20 per cent more, while the majority of providers added between 6 and 12 per cent more. 

The only provider to charge less was 'A Choice', which charged 1 per cent less to customers who bought on the day.

These differences are not insignificant - on average it resulted in an extra £86.35 a year, with worst offender More Than charging an extra £269.05. 

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As policies are tailored to the buyer's individual circumstances, these percentage differences are representative only of this specific scenario and providers will add different charges depending on the details given.  

The insurers who top the list here may not do so every time, and those who appear to charge less may charge more depending on the type and level of cover the customer is after. 

It's not just car insurance where this is a problem - evidence suggests it is starting to spread to other types of insurance too.  

The industry source, who wished to remain anonymous, said: 'They've started doing this elsewhere, like in van insurance – it's spreading as we speak. 

'It's only a matter of time before they start doing this with other types of insurance.'

Home insurance: is the same happening? 

Further searches found that some providers have already started deploying the practice in buildings and contents cover. 

This is Money ran a search for contents insurance on a London flat and found that while 11 out of the 20 insurers sampled did not add any costs for those buying on the day, nine did.  

Of those that did, the added charges again varied widely, from One Call adding just 3.2 per cent to Tesco Bank adding 21.5 per cent.  

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When it came to testing buildings insurance, six out of 20 insurers gave a higher quote when buying on the day, with Axa adding 29.6 per cent, Swiftcover 29.5 per cent, Admiral 17.2 per cent, Sainsbury's 2.6 per cent and both Halifax and Bank of Scotland adding 0.5 per cent. 

Tests were carried out across various comparison sites, including Go Compare, Compare the Market, Money Supermarket and Confused.com. 

A well placed whistleblower within the insurance industry told This is Money: 'This is something that came to the market about a year ago and now all the companies have jumped on the band wagon. 

'I don't think they set out to rip people off but that's what they're doing.'

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