Car insurance providers have been asked by the Financial Conduct Authority (FCA) to suspend admin fees and waive cancellation fees in the short term to help customers through the coronavirus pandemic. This means motorists can change their agreement from a comprehensive policy to a third party fire and theft agreement or cancel their policy free of charge.
However, research from Choose My Car has found motorists across the UK spend a total of £592,969,306 on admin fees alone each year.
The analysis found UK drivers make an average of less than one change each year to their policy with an average of 0.64 updates.
But with more than 41 million drivers on the roads the total figure equates to up to two million policy adjustments each year across the UK.
Experts at Choose My Car found the average cost of each update is £22.50 with almost £600million spent nationally.
Almost three quarters (72 percent) of endurance providers were found to charge an administration fee on their products.
Motorists have been warned some firms charge an admin fee for making changes on the phone despite offering an online service where updates can be made for free.
Road users are urged to look over their insurers terms and conditions to see if they could save by using a laptop instead of calling up their helpline.
This is also likely to be an easier method as road users do not feel under any time constraints and can spend time thinking over what changes are needed.
According to consumer champions Which?, car insurance admin fees are on the rise with costs up 48 percent since 2012.
They say setup fees have increased the most with an 82 percent rise on charges since 2012.
Although many firms do not expect customers to pay this anymore, some setup fees are now as high as £37 despite many being free.
Go Compare says motorists should question their insurer if they believe too have been charged an unfair fee.
Insurance firms could decide to reduce or waive the charge if they think it may keep you onboard as a customer.
Motorists could also complain to the firm if they were sure the added charges were not declared before a policy was taken out.
Published at Wed, 27 May 2020 06:19:00 +0000