Some car insurance companies are charging “eye-watering” fees on top of annual premiums, according to the consumer organisation.
It found that some insurance companies charged up to £75 for cancelling a policy – even in the cooling-off period. Others charge £50 to renew a policy or £30 for duplicate documents.
In response, the industry argued that overall premiums had fallen and that the market was highly competitive. In its study, Which looked at fees being charged by 44 UK car insurers. ‘Squeezing money’ It found that one company, IGO4, charged £35 for adjustment fees, such as changing your name, your address or your job. Five other companies did not charge anything. Another company, 1st Central, charged £50 to renew a policy, while most other companies process renewals for free. Axa Direct and Swiftcover both charged £30 to provide duplicate documents – again a service that is usually free. Other companies charged considerably more than their rivals when it came to paying monthly, rather than annually.
“We’ve found some insurers charging customers eye-watering admin fees that can be hard to avoid,” said Richard Lloyd, the executive director of Which? “We want companies to ensure their fees reflect actual costs, and aren’t just a way to squeeze more money from customers.” Tips for consumersHowever, the insurance industry said the market was highly competitive, and that average premiums were lower than they were two years ago. The Association of British Insurers (ABI) advised customers to read their policy documents carefully. But it agreed with Which? that extra charges should reflect the costs involved.” In accordance with the rules of the Financial Conduct Authority and relevant legislation, the fees insurers charge must be clearly and fully set out, and broadly reflect the costs they incur,” said James Dalton, the director of general insurance policy at the ABI. Which? offered three tips to consumers looking to minimise extra charges:
• Consider using a 0% credit card, to avoid extra charges for monthly, as opposed to annual, payments
• Make changes to your policy online, rather than by phone. Often that will make them free
• Haggle with your insurer, to see if you can get the extra fees dropped.
16 August 2015 By Brian Milligan Personal Finance reporter
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