We have previously praised car insurance companies for reducing the average cost of their insurance policies in the last few months with this, no doubt, being welcomed by motorists. However, an area of costing that is often overlooked are some of the fees that a number of these companies charge for a variety of situations so let’s have a look at some of them highlighted by Which?
There is no doubt that a number of policyholders do not realise that, if they pay for their car insurance on a monthly basis, they may end up paying more over a 12 month period than if they had paid the annual premium all in one go. To all intents and purposes, if you pay monthly, you are borrowing the money to pay for your car insurance and the insurance company are entitled to charge you for this.
However, there can be quite a difference in the annual percentage rate (APR) being charged. For instance, Endsleigh charges 39.7% per annum, Allianz charges 34.38% per annum, The Post Office charges 23.5% per annum, Admiral charges 18.6% per annum but First Direct and Age UK do not make any additional charge. These interest rate charges can make quite a difference to the premium but for many people they have no option from an affordability point of view other than to pay monthly.
Many insurance companies do not charge a policy renewal fee although one that does is Hastings Direct – £20. Hastings Direct also charges a policy set up fee of £20 if done online and £32.50 if arranged over the phone. The AA charge £28.
Some car insurance providers charge a policy adjustment fee to cover things like adding another driver to the policy. For instance, Elephant charges £17.50, Zurich charges £25 as does the RAC. Allianz do not make such a charge.
A number of insurance companies charge a cancellation fee with Endsleigh charging £75, The AA charging £50, Sainsbury’s Bank charges £26.50 but NFU Mutual and Age UK not making any such charge.
A few insurers will make an additional charge if you pay by credit card with AXA charging anything between 2% up to £9.99 and the RAC charging 1.25%.
So, as you can see, there are a number of fees that are potentially payable which could increase the cost of insuring your car. We would welcome your thoughts on the above.