/ Home & Energy, Money, Motoring

Stop ‘rip-off’ home and car insurance charges

When I moved house recently, my bank account and credit card provider changed my details without a charge or fuss. So why won’t car and home insurance companies do the same?

Insurers are fighting a fierce battle to appear at the top of comparison site listings and win car and home insurance business.

But while headline prices appear low, if you make any minor changes to your details (such as getting married or moving house), choose to pay monthly or even cancel your policy, you could find yourself hit with hefty charges later on.

Big household names such as AA Insurance and Hastings Insurance are among the worst offenders, but they’re not the only ones.

Policies chock-full of charges

Consider a few examples from a variety of insurers:

  • If you want to pay by instalments, you could be charged an APR of over 30%. Some providers even charge a credit set-up fee.
  • Some providers will charge you a policy set-up fee, followed by a renewal fee a year later.
  • Make changes to your insurance policy and you could be charged up to £35. That’s not including changes to your premium based on your changed risk profile.
  • If you need a duplicate copy of your policy, you could have to pay up to £35 for it.
  • And if you want to cancel, one insurer we looked at will charge you a whopping £75. Others charge as much as £55.
  • Some providers will then work out your refund on a ‘short-term’ basis if you cancel. This could mean that you won’t get a pro-rata refund, but a lower amount. For example, cancel in month three and you might only get half your premium back.

It’s inevitable that many customers’ circumstances will change, and the costs of updating their details on an insurer’s system shouldn’t be an opportunity for the company to extract further profit from you.

Who should take charge of charges?

If you change address or vehicle and your new circumstances mean you pose an increased risk to the insurer, it’s only fair you should pay extra to cover the revised premium.

However, fees should be proportionate to the cost incurred by the insurer. And, at the very least, all fees should be clear at the outset and available on the insurer’s website, not just when documents are sent out.

All too often it’s a lose-lose situation for the customer. Update your personal circumstances and chances are you’ll be charged for it, but don’t update them and your policy can become invalid. Cancel the policy instead and you could be hit with even bigger charges.

Car and home insurance costs enough without insurers and brokers squeezing every last penny out of customers making common changes to their policy or paying by instalments.

What’s the biggest insurance charge you’ve been hit with? And who do you think should pay for common changes to car and home insurance policies?

Comments

Bank and credit card agreements are of indefinite duration. Most insurance policies are contracts written for 12 months, so you are not really comparing like-with-like. And since it is quite likely that you may owe money to a financial institution, it is not surprising that they are keen to keep track of your movements and not charge for the priviledge.

If the policyholder chooses to make a mid-term change to their insurance policy, they should pay the cost of this, no one else. However, I agree the charges should be proportionate to the administrative costs of making the change and no more.

When I renewed my car insurance with RIAS I called to say that I would be retiring in about two months and gave the exact date. I was asked to call back when I had retired. I did this and was told that there would be an administration charge. After protesting and saying that I would move to another company the following year they agreed to waive the charge.

This incident will ensure that I shop around next time my insurance is due for renewal, which is something I should be doing anyway.

And of course, if you disclose something at contract renewal, they should not attempt to spring a charge on you later. Well done for standing your ground – and what were they going to do about it? Tell you you couldn’t retire?

You might want to get a quote from LV=. I’ve been with them for years and, whilst they are not always the cheapest on comparison websites (I’m talking £10s not £100s here), they have always been very fair with me, including paying for Diesel misfuelling a few years back.

I was dreading the annual shop around this year, having read about the latest round of increases, but my renewal quotes went down and I’m already on maximum NCD.

Anne says:
16 April 2012

Actually… I haven’t been. I’ve been with Endsleigh for years and years (when I joined nobody else would insure non-related house sharers) and have moved repeatedly in that time, including two moves in 2011, in May and then in November. Each time, they have been perfectly happy to recalculate my policy and premium without any kind of charge other than issuing a 12-month premium from my move date rather than the months left to run, which I don’t have a problem with. I’ve had to claim twice but my premiums have still gone down.

As a point of interest, if you move mid-premium you’re basically breaking a contract. Why is it so terrible to charge for cancelling early? If it was something in the customer’s favour, you’d have no problem with it. I haven’t been charged a fee but I don’t think they’re quite the devil’s work you’re implying.

I lost faith in insurance companies decades ago, when I found they were running in house seminars on ‘how to decline valid claims’.

As with any for profit business, the emphasis is on the profit margin, not customer service so the insurance companies will squeeze the maximum out of your pockets by charging whenever & for whatever they can.
With the rise in insurance fraud, the companies now use that as an excuse to jack up prices and levy extra charges.
With car insurance being compulsory, why doesn’t the Govt’ have a compulsory 3rd party policy, issued alongside the tax?

Lorraine says:
26 April 2012

I just phoned to cancel our car policy with still just over 3 months left and they said we would have to pay them 80 pound to cancel and we only got on installment left to pay she went onto say if we did it after our last payment then we wouldn’t owe as much should be just the 50 they charge for charging something on it, so told her we gonna go with someone else next time

Mike says:
26 April 2012

We just called Churchills to add 2 friends to our policy so they can use our car on a visit here. They charged us £15 for this. It was pointed out that the policy is due for renewal before their stay is over and that we would have to pay a further £15 to add them to the renewed policy – we offered to renew the policy early so as to avoid this double whammy – they said it was too early to renew! Shall be going elsewhere.

My biggest complaint however, is about hiking up your premium when they discover that you have been fined for speeding. This was added to my premium for every year that the points were on my licence. As I had already paid my fine for the offence and have never had an accident, I cannot see what right the insurance companies have to dish out additional penalties. This would make a very interesting Which? report.

Teri says:
29 April 2012

Can any one help ? I cannot pay this months premium for my car insurance ! How long is my company obliged to insure me ? I can pay next month but they won’t listen to me and have said that when the premium is due next week if I dont pay I am not insured.

Hi Teri,

I think you need to be clear about these monthly premiums and check your policy details before anyone can give you further advice. It makes a difference if there is a credit agreement in place or if you are just paying the normal premium by monthly installments. And rather than rely on random advice here, why not visit your local CAB.

Mo says:
18 May 2012

I was with iBuyeco car insurance two years ago, 6 months into the policy my car failed it’s MOT and I decided it would be a good idea to get a new one rather than pay out for repairs when it wasn’t worth it. IBuyeco told me that they may not be able to insure a different car and despite having 6 months left on the policy I would not only not be entitled to a refund but would have to pay them £95 to cancel!! Luckily they did not make a fuss about the new car but when the policy came up for renewal they demanded £300 more than the cheapest insurer online and I ditched them quick!

On a more positive note I am now with Auto Direct and they are brilliant, I bought a nearly new car last month and they changed my details and upgraded the policy to fully comp for a very reasonable amount (still less than what iBuyeco wanted for third party) and were very pleasant and helpful in their UK call centre, quick to sort it out and no fuss. I will still shop around but my experience with Auto Direct has really improved my view of insurers!

Barry says:
18 May 2012

I cancelled my car insurance with Hastings Direct after only one month. The cancellation fee was £50.
When I came to tax my wife’s car online, I discovered that Hastings had not registered the policy with DVLA. The lesson? I will not use Hastings Direct again.

Jill says:
10 July 2012

wish i had read this before i took insurance out with them. They are now saying i didnt tell them about the car fire i had when i took insurance out with them which i did. They want an extra £50 off me or else they will cancel my insurance!! I’m fuming

Gordon says:
15 June 2012

I just changed my car from a big powerful group33 4×4 car that did 25mpg for a cheaper to run, tax and insure 2009 diesel golf bluemotion. I expected a lower premium but was stunned that the AA Insurance stated that I’d be still paying £1200/year (that’s with 8 years NCD) and only receive a discount of £7 on my last premium. I looked around the net and insured the Golf for £350/yr. When I phoned the AA to cancel my policy they stated that I’d have to pay them £257.95 if I paid then, or over £300 if monthly instalments were chosen for the cancellation. I’ve been a full AA Member for 24 years and a customer of AA Insurance for 9 continuous years and won’t touch them ever again. Disgraceful. Trouble is my wife still needs to change the address for her car with AA and I’ll need to change my company van insurance address next week when we move house. I’m not looking forward to the bill I may get. They’ve got you by the short and curlies. Avoid the AA Insurance and if you do insure with them, change to a different company when your policy runs out but not before! Have a look at the Autotrader Insurance system which gives an easy to use comparison, then choose. Don’t trust the AA to choose a good renewal for you as I did year after year.

Rhi says:
3 July 2012

I have moved house and i called my car insurance company to inform them, they have informed me that my premium will go up by £499, it will cost me £55 to cancel it but i dont have the deposit for a new policy with another insurer i am stuck between a rock and a hard place!

Cray says:
2 August 2012

What was the outcome of this? Did you pay or is it still in dispute?

I’m in exactly the same position. Diamond is trying to charge me £371.90 to my already expensive £745.70 policy (I don’t even drive more then 5000 miles a year) just to change my address. They said it was a higher risk postcode even though my car is now on my private drive in a locked garage when before it was on the side of a very busy main road. Is it me or is just under £400 a bit excessive for a more secure parking??

To add insult to injury when I went on their website and entered the EXACT same policy with the new address it not only wouldn’t cost me this unjustifiable amount. It’s about £30 cheaper then my current annual amount. Does anyone know if they have to honor this price based on my current circumstance or weather they will just argue that it’s a new customer discount and demand I pay this increased premium??

Richard says:
4 July 2012

I am moving to a new address about six miles away. We currently loive in a rural village, and where we are moving to is even more rural, but certainly a respectasble community. Yet the Post Office car insurance company are hiking my monthly premium up by about £4, as the underwriters claim it’s a higher risk area! Then they have the gall to apply a TWENTY PUND charge to administer the change of address. If every utility and other company did likewise, moving would be too expensive to consider!

Jill says:
10 July 2012

I have recently insured my car through compare the market.com with Hastings. while on compare the market.com website i filled in every question i was asked including telling them my car had caught fire in Jan 2012 and was a right off and i was paid out. I put how much i was paid and that i had lost some of my no claim as i didn’t have no claim cover. With all this information the website gave me a list of companies and their prices. I choose Hastings as although not the cheapest it offered everthing i needed i also took out an extra cover for motor protection. I paid in full at the time on the website. I received my policy and certificate. Now they have contacted me saying they want proof of the no claims i had left. Which is fair enough i got them this info and sent it to them. I have now been contacted by them saying that after speaking to my old car insurance they have found out about the claim i made to them with the car fire. They have no record of this and that i now must pay another £59 or else they will cancel my insurance? I explained i had told them on-line she said i can see that you did on line but that never came through to us so we now need to change your policy? she said had i had dealt with them direct this wouldn’t of happened. If this is the case why are they on compare the market.com?

TT says:
19 July 2012

I’m Livid! Just contacted my car insurers to inform them of a change of address. They are now charging me £55 for the privilege (apparently this is an administration fee) Disgraceful…..wont be renewing with them in the future!

This is such an excessive charge that it would be reasonable for you to have been told about it as a significant feature of the policy. I suggest that you go back and give the company the opportunity to offer a more modest charge. If they are not prepared to, then ask for contact details of the regulator and maybe say that the company is currently featuring on Which? Conversation – but you would need to name and shame.

Best of luck.

Pidgers says:
25 July 2012

Had only just taken out insurance for my car and within a month had someone drive into the side of me, insurance company decided that it was uneconomical to repair. The insurance company wont insure the car I am now looking to purchase as it has 7 seats so I have to pay them for the full years insurance even though they only insured my car for 1 month. So now have to find an additional £65 per month for car insurance for a car that I don’t now have. How wrong is this!!!

Diamond is trying to charge me £371.90 to my already expensive £745.70 policy (I don’t even drive more then 5000 miles a year) just to change my address. They said it was a higher risk postcode even though my car is now on my private drive in a locked garage when before it was on the side of a very busy main road. Is it me or is just under £400 a bit excessive for a more secure parking??

To add insult to injury when I went on their website and entered the EXACT same policy with the new address it not only wouldn’t cost me this unjustifiable amount. It’s about £30 cheaper then my current annual amount. Does anyone know if they have to honor this price based on my current circumstance or weather they will just argue that it’s a new customer discount and demand I pay this increased premium??

My son had his insurance with the co-op he paid his two months deposit and struggled most of the year to keep going first he was in college then an apprentice job we asked the co-op if they could change the dd date because it fell 10 days outside his payday they give you 21days after which is reasonable to pay it but he could never afford to double up being a young driver on his 1st years insurance July was his last payment then he had a free month until September but he would have had 1years ncb he was 30hours late in phoning up to pay they told him too late it’s cancelled!!!! No letter no phone call no years ncb now no car on the road they wouldn’t put me or him through to any complaints team no help consideration or anything just sorry you should have have paid its cancelled now some companies want astronomical amounts because he has a cancelled policy behind him and he has to start all over again it’s such a shame. And it don’t seem fair that there’s nothing I can do about it it’s also frustrating not being able to talk with anyone.

SammyG82 says:
10 August 2012

I am disgusted reading all of this. so i thought i would name and shame also. Shelias wheels decided to hike my renewal by a huge amount. so as i am in the process of moving house, i phoned them to tell them that i would not be renewing, as as a new cutomer they give me it 300 cheaper. i gave them my new address – bearing in mind i have 12 days left with them. I was stung with a 29 pound admin fee for changing my address. .. i put the phone down in disgust. Then i recieved a new packet in the post, telling me that because i have moved address, for the last 12 days on my policy, because i have moved then are bumping my premium up for the year i have already paid! i am livid! They didn’t tell me this on the phone, and the lady on the phone even told me that the area i have moved to is less risky, so they should be paying me!

Update on Diamond Insurance trying to charge me just under £400 to change my address.

WELL I ONLY WENT AND WON!!!!!!!!!

It took about two weeks…

Long story kind of short.
After countless, repetitive phone calls and many arguments I managed to get an English call center manager on the end of the line. We had a good chat, I told him how much it would be on-line as a new customer and gave him the reference number. Previous phone calls had informed me that a brand new customer with the exact same details as myself would pay the updated price to the penny, I checked this using a different name but all other details mimicked my own. Well, he was telling porkies. I announced to the manager that this statement had been given to me on a recorded phone call by a member of Diamonds staff (like he didn’t know) and with this backing my case I would be willing to take this to court. He made an excuse out of the on-line quote being based on a one off payment then asked me if I wanted to cancel my current membership and take out this new one. I Obviously refused as I would have lost my deposit and no claims for this year. Cheeky bugger!! Next he suggested we looked into tweaking my policy. We went through the entire details of it, amending both mine and my known drivers job title’s, mileage, car value ect. Miraculously this knocked off all but ten quid off that fee!!! Fed up of all the hassle I accepted, set up a new standing order and went on with my life.

Hope this helps anyone else in similar situations. xx

Crime Stoppers says:
30 August 2012

My insurance policy for a Mondeo with Chaucer Direct expires on 16 September. I rang up to explain I was in the process of selling my car so cancel the policy but with only 17 days to run dont bother working out a pro-rata refund. The cheeky so and so wanted to charge me a FURTHER £65 to cancel. So I told them to let the policy lapse. They therefore lost the chance to quote for a policy for the new owner when he takes over the car in a few days time.
Outrageous abuse – they ought to be bankers.

CS