/ Home & Energy, Money, Motoring

Stop ‘rip-off’ home and car insurance charges

Pick-pocket stealing money

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
Guest

RIAS – Home insurance, monthly premium £8, increased mine to nearly £11 without so much as hows your father, so I cancelled within 2 weeks. They have sent me a bill for £15 cancellation fee and £3.98 charges totalling £18.98p… they think they can increase their premiums under a recurring policy by 30%+ and get away with it. I think distance selling regulations might apply, increased premium etc.. So am going to check, not going to pay it without a FIGHT!

Guest

Car insurance, cancelled within two weeks of starting one up as their prices doubled from 69pound to 120. Found a better deal and accepted the fee but charging us 112 on top for wot we used. Despite being conned, we don’t get paid til end of month but won’t accept the wait.

Guest

hastings direct will charge me £45 cancellation fee , plus ,arrangement fee of £20 ,plus call centre arrangement fee of £12.50 and any charges made by the insurer, so i guess they are just a broker. So strongly suggest you avoid hastings direct, or hastings anything.That was from Go Compare and they dont compere admin charges.

Guest

I have just rang my car insurers to inform them of my address change.My car is now garaged under lock and key yet was told i have to pay £92.75 for this change !!!! I am furious. A £ 25 fee for address change and the policy fee has risen due to a post code change !!! Its all a scam and the government should stop this.Quotes can vary for the same cover by £ 500 its a huge scam.Avoid Hastings Direct.