Motor insurance up for renewal soon? Claim a £40 voucher for Amazon, Argos, or Dining Club when you buy Churchill Motor Insurance, ends 4 Feb.

Money & Insurance > Guides

Insurance and the hidden fees to watch out for

Robin Bowman

Robin Bowman
Mar 10, 2017

As an increasing number of people are realising the value of shopping around when they buy insurance, companies look for ever more creative ways to take extra pound off us here and there.

One of the most lucrative ways, and one any customer should look out for, is the use of so-called ‘administration fees’.

These apply to all insurance polices, but car policies seem to be the worst, slapping on charges for anything you might want to alter.

These really amount to the payments we are forced to make for someone working for the company to tap a few times on a keyboard and press enter.

And they’re a scandal.

When you compare car insurance prices and switch to save, here are a few of these charges you should watch out for. 

 

Cooling-off period charges

How about the excellent ‘Cooling-off’ period clause that applies when you sign up to an insurance contract online.

This gives you the right, by law, to change your mind within 14 days of signing up for insurance.

You probably know about this, but did you know that a majority of insurers will actually charge you to cancel during this period, not only for the insurance cover you’ve had (which is fair enough), but they’ll also slap on an admin fee.

Research shows that just 11% of polices offered a full refund of premiums and no admin fee during the first 14 days.

In other words 89% charge you!

Almost half of companies, or 45%, charge an admin fee to cancel and also levy a pro rata charge for the period you were covered.

Researchers found that, of those insurers that charge a fee, only 2% of companies charged less than £15 and 17% charged £30 or more, with the highest fee being £75.

Car insurers seem to be worst of all, with one survey, which checked 225 companies, finding that 71% charged an ‘adjustment fee.’

 

Making a change

You’ll also almost always get clobbered if you make a change to your policy.

We’re not talking here about an extra cost when, for example, you upgrade a battered old mini to a Ferrari. You’d expect a different level of insurance risk to mean a new premium.

We’re talking about the charge levied for you merely to make the change, on top of any premium alteration.

Before you agree to a policy, you might want to check out what the company charges just in admin for:

* Changing address
* Changing your car
* Changing you name (if you marry, for example)
* Changing your job
* Changing the forecast yearly mileage on your car.

Once you're switched on to these charges, it's time to run a comparison and find a cheaper deal.  

 

Changing online

You might imagine that if you can do everything else connected with your policy online, you could also make changes online without incurring a fee.

Researchers have found that although 63% of policies could be bought online, only 32% allowed customers to make changes themselves.

And of those that did allow changes, three quarters charged fees of £20 and up.

 

Fighting back against hidden charges

But you don’t just have to accept this ‘hidden’ charges.

First of all check a policy you’re considering for a list of fees.

If it’s vague and doesn’t specify charges, ask for them to be clarified.

If the fees seem unreasonable, challenge them at this point before you sign up.

Challenge the fee.

Ask what it actually covers and point out how unjustified it is for a change that takes a few seconds to complete.

Ask where in the small print of your policy these fees are mentioned. If it’s not prominent, point this out and make it clear you think this is grossly unfair.

Threaten to leave. It there’s no sign of movement, ask how much a cancellation fee would be.

Threatening to cancel the whole policy and take your business elsewhere will often encourage an insurer to forget all about the fee.

If you strongly feel you've been mistreated, get in touch with us at A Spokesman Said. We're in your corner. 

Newsletter silhouette

GET OUR NEWSLETTER

Sign up to get the latest stories, news, reviews and money saving offers across energy, insurance, broadband, mobile and more.