/ 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

My house insurance (building and contents) has just come up for renewal. I have been with Abby for many years ,through their various transformations to what is now Santander and they advised my latest premium would be £1,159.02 for 12 months from December this year.
I have not checked for along time so I went to Gocompare.com and received about 30 quotes ranging from £113.01 at Budget to £342.38 at Churchill. Santander quoted £146.62.
I challenged them and after due consideration they offered to reduce my revised premium by £163.05 !!!!
How long they have been overcharging me I don’t know but I just shows the rewards loyal custom.
Needless to say I’m not renewing and will be transferring my bank accounts also.

The mac says:
26 November 2014

Funny you mention that, this very thing got highlighted on watchdog last week. Stupid banks

A.vieira says:
25 December 2014

AXA Insurance. AXA Insurance.

Please read this one.

AXA insurance.
I’ve found this one on gocompare.com site and it came as the better cheaper price so I did my car insurance by installments £43 a month.
Within 8 months time I made 3 changes because I bought different cars and the Insurance start going up every time but I couldn’t do nothing and have to accept and pay the insurance ever single month. On the 3rd change (7 months of insurance I was paying £ 125.00 a month). On the 8 th month I sold the car and bought another car, same model, same year. I tried use the site to change the car online and the quote came to £270 a month.
I rang them to cancel the Insurance and they ask me £75.42 fees.
I complained, it wasn’t fair.
Next day I agreed to pay the fee £75.42. 2 days after saw a email telling me that in 2 days time the insurance installment will be due and exactly yesterday checked my bank account and is said £125.00. Be careful with that people

[This comment has been edited to align with our community guidelines. Thanks, mods]

Pierre says:
6 January 2015

Hastings

I rang today to cancel a policy for a vehicle I’ve literally just sold.
They said i’d have to pay £79! £45 cancelation fee, £20 failed payment charge (I cancelled the DD with my bank on sunday so that they couldn’t take Jan’s instalment out ) and the remainder was for 6 days off insurance Jan 1st-Jan 6th.

My query is… Do I have to pay this? or can I just leave my DD cancelled, which I assume will cancel my policy anyway?

Pierre

A m Duffy says:
8 January 2015

My car insurance is up in 2 weeks I phoned to let them know I had changed address there charging me £49 for a change of address complete joke complete rip off

michael hughes. says:
30 March 2015

hastings phoned them up yesterday to explain I wanted to cancel my insurance on my car as I was in the process of trading it in for another car. They said there would be a £25 charge for this as I was cancelling the contract. fair enough I thought , anyway the deal on the other car didn’t happen so I got back in touch with hastings to explain that I wanted to reinsure the original car.to my astonishment the payments have gone up by £7 per month. absolute rip off

Paul says:
13 April 2015

Just moved home 200 meters up the road, the only change to my postcode is the last 2 letters. I also have 2 cars so called each insurance company in turn…

First Chaucer Direct, got straight through not pressing buttons or listening to messages and changed my address and they waived the admin fee as i was moving around the corner… Easy hassle free thank you Chaucer always a please that why i have been with them 4 years.

Second, called Churchill for my other car, got the usual press 1 press 2 etc etc…… Finally spoke to someone to change address and they wanted to charge £26.50 admin fee…. to which i replied sorry my other insurer has waived it as i’m only moving around the corner please can you. To which i got a no, so i said ok thanks i’ll not be changing my address then and hung up. I’ve also wrote an email complaint to them and standing my ground on this. If they say i’m not insured having car at my new address i can leave it outside my old one and walk the distance instead to make a point!

roy says:
15 April 2015

why can insurers increase premiums by £50 to £100 every year with no change in circumstances I have never made a claim in over 40 years my car is kept in a secure compound surrounded by 6 foot walls and gates no points or anything on my record but yet they still manage to increase it do they make it up as they want its about time there was some kind of regulation to stop them charging what they like

Michelle k says:
15 April 2015

I called Budget Insurance to change my vehicle. They said I couldn’t change and would have to take out a new policy.. They quoted me DOUBLE the quotes I had already obtained and refused to budge. I said I’d cancel then and go elsewhere and they said I’d owe them 75 cancellation fee plus over 50 in insurance I’d apparently had but not yet paid for. I agreed for them to take this on my usual direct debit at the end of the month WHICH I have now cancelled with my bank…. They can take a running jump for their money…

richard says:
29 April 2015

my insurance company want to charge me OVER £120 to cancel my car insurance policy. so i looked for another car, found one i liked, 1.4ltr engine so asked about changing vehicle it would DOUBLE my monthly premium

mattreid1983 says:
6 May 2015

autonet car insurance. my premium was £155 for 12 months. I was buying a car that i had to insure to keep on the road overnight, the car was due to be delivered when the offices were closed and it would not let me buy online so to keep legal I insured before the office closed. The car arrived some hours later and was not as described so I didn’t buy it. phoned first thing the next morning and was told they are going to charge me £50 to cancel. equal to about 4 months cover. absolute rip off

marie mccann says:
23 May 2015

i changed cars last year,took out new policy with same insurers they charged me a cancellation fe of over £200 is this legal?

Scott Hadden says:
5 June 2015

Just got off the phone to 1st Central to change my direct debit date. I wanted it changed to the 4th of each month. I currently pay them on the 25th but due to a job change my pay day has changed. The company can change it over 12 days of my current date. I have raised a complaint with them as they cannot set it to my preferred date. They were willing to waive the £10 fee but could only change it to the 2nd. As I am not paid to the 3rd this is clearly not an option. There system only allows a 12 day window change. I find the whole situation ridiculous clearly the computer says No. Will be surprised if I even receive a reply from them.

Jeminy says:
9 June 2015

I just got stung by Go Skippy. After being kept on hold for over 30 mins yesterday, then redirected to the “correct department2 only to be put right back to where I started, and put on hold again for another 30 mins, I finally spoke to an advisor about changing my address. When I renewed my policy a few weeks ago, I added my fiance to the policy free of charge and made several updates to my circumstances, free of charge. I mentioned at that point that I would be moving in a few weeks and the guy said that if I’d been moving at that point, he’d have changed the address whilst updating everything else, which made me believe he’d have done it for free. So, when I spoke to the advisor yesterday, and she mentioned the £50 admin fee, I told her that the previous advisor had said he’d have done it for free. I told her that I wasn’t happy to pay the admin fee, as I chose to renew my policy with them and they should be rewarding customers for staying with them, not charging ridiculous fees. She agreed to waive the fee, but said I would still have to pay £75 extra premium increase, owing to our new postcode. Fair enough, I was happy to pay that and duly did so. I then received two missed calls from them later in the afternoon, and a further call this morning, which I answered. They looked out my previous phone-call, listened to it, and decided that the advisor didn’t expressly state that he’d have changed my address for free, thus I had mislead the advisor yesterday and I must now pay the £50 admin fee! She said I could either pay it over the phone then and there, or they will send a letter out. I was so shocked that I said to just send the letter out. I feel hounded and cannot believe how poor their customer service is. For a return customer to be treated like this is shocking.

Dreadful customer service. It must have cost them at least £50 to trace the previous call and replay it. What an attitude. It’s a sting alright because you are in a trap; without your correct address, and it must also match the address held by DVLA for your vehicle and your licence, your cover could be void and you could be committing a serious offence.

I should be interested to know whether the new Consumer Rights Act might have any bearing on these outrageous charges when it comes into force.

Ann says:
22 June 2015

Due to a change in circumstances since effecting my new car insurance policy in March, I needed to add a named driver to my policy. My current provider (Saga) do not add named drivers for commuting so I had no alternative than to cancel the policy. They now want to charge me £63.33 for something that was necessary, not out of choice. I appreciate they said the cancellation fee ‘is in their Terms & Conditions’. I don’t have a crystal ball to confirm circumstances will not change for 12 months!!

Kier says:
6 July 2015

I began driving this year and managed to get reasonable insurance with RAC for my mazda mx5 track car, as times change sadly so does my car. I’ve recently been looking to change from a 1.6 1991 mazda mx5 to a 1.8 2002 audi a3 as I need something a bit bigger and more practical. I have taken into account the type of car and engine size thus expecting a slight increase in my premium. I’ve looked around to find that some insurers would actually be cheaper than what i’m currently paying if not the same. I got a new quote from RAC as, ideally, i’d like to stay with them and build up a NCB but I was shocked when I found that they would charge me an extra £1500 a year.

I have only been driving for 5 months, I am 23 and do have previous driving experience so I know not to expect miracles with affordable car insurance but I still don’t think it’s right that RAC try to get that much more a year. I may have to bite the bullet, pay the £55 cancellation fee, and change insurers.

(I could go for something like a ford fiesta 1.4 etc etc but the audi would be a straight swap for my mx5 as i don’t have the money to buy a car outright at the moment)

knowlsey says:
16 July 2015

sinsurance wanted £140 pound plus there fee for changing black box in sons car apparently they dont change over just fit a new one. so what do i do with the old 1 ???????

Emma Waters says:
19 July 2015

I’m with Zenith car insurance, I rang them to tell them i’m moving from Bristol to Manchester I already pay £93 a month, they said the new payments would be £285 per month for the last 2 months of the policy this is because of a change of address and there is a claim from another drivingwho I had a accident with is still be being dealt with, surely they can’t just up my policy until the current policy ends ? and I said to them I need to cancel my policy as I can no longer afford to run my car and they told me I would have to pay £450 to cancel my ploicy does this sound correct

Emma Waters

A friend recently changed her car. For some reason, the insurance company still showed she’d owned the new car for “5 years or more”. She pointed this out at renewal and was charged an extra £100 on the Sheila’s Wheels premium [so, not an admin charge] “because drivers are unfamiliar with a different car”. Do other companies do this? I’ve not noticed anything similar before. As it happens, she still couldn’t beat the price. I’m changing my car shortly and it will be interesting to see how Direct Line [my insurer] compare …

Jennifer says:
29 September 2015

SAGA charge cancellation fees on Car Insurance if you switch my policy went up £50+ on renewal with them so I cancelled. Why does government allow them to do this ? Also why should they be allowed to use your card details and take money to renew anyway this is all so wrong!!SAGA had my money and I did not claim.Now I am penalized for using their services.

I have changed my adress and when I called my insurance company said that they d9on’t cover that area(even if it is 2km from my previous adress)and they canceled my policy and now I have to pay the rest of ammount till I pay the rest of money(£800) what should I do?????

Hi Adi – I suggest you contact Citizens Advice. This must be a common problem. Best of luck.