When it comes to paying for car insurance, you may think you have it all figured out – you choose your level of cover, pay your annual premium and you’re good to go.
However, things are never that simple; there are several fees that may catch you off guard. That’s why they always say you should “read the fine print”. Although sometimes it sure feels like you need to buy yourself a quality magnifying glass to make sure you’re picking up on all the nuances that are thrown at you in those policy docs.
You want to cancel your car insurance policy? Say hello to cancellation fees. You want to change your address on your policy? Depending on how you do it, you might end up with admin fees. Want to pay in instalments? Great. But credit fees are a thing too.
Is your head spinning yet? Breathe. We’re here to guide you through the jungle of extra car insurance fees you might face. At least if you’re prepared, you can budget appropriately.
What are car insurance cancellation fees?
Let’s say you rushed and bought an annual car insurance policy without shopping around first. Oops. We know you just wanted to drive the car home ASAP, but that’s where temporary car insurance comes in. It means you can get your car home safely and legally and shop around for the best deal.
Anyway, you realise just a few days after you’ve bought it that there’s a much better car insurance policy out there. You could be saving a fortune. You start beating yourself up for not doing your research.
But it’s not all bad news. You can cancel your policy. And if you do it during the 14 day cooling off period, you’re entitled to a full refund of your unused premium. This period starts from the day your policy becomes active or the day you receive your policy docs; whichever is later.
Now, some insurers may deduct a small amount to cover the premium for the days your policy was active as they technically still covered you. Some won’t deduct anything if you haven’t made any claims.
Now let’s talk cancellation fees, which are totally separate from the refund you get on your premium (yup, it can get confusing, but that’s why we’re here).
When do cancellation fees apply?
Cancellation fees can (and often do) apply within and outside the 14 day cooling period. So while you’re entitled to a refund if you cancel your policy within those two weeks, you may still be charged a cancellation fee.
This fee is designed to cover the work behind the scenes to cancel your policy and it’s totally separate from the refund you may be entitled to. That’s why you might be charged this fee regardless of when you cancel your policy.
Typically though, cancellation fees are cheaper on average if you cancel during your cooling off period. They range from £24 to £100 during the cooling off period, but can rise to as much as £125 outside this period. Yup, it can get steep.
The good news is, some car insurers don’t charge a cancellation fee at all. So it’s always worth checking your policy docs or ringing up your insurer if you’re unsure.
What are car insurance admin fees?
Admin fees are the fees your insurer charges for changing details to your policy. You probably know that if you move house, change jobs, or change your name, you’ll need to tell your insurer.
Some of the above changes may result in a change to your premium. That’s not always a bad thing; sometimes you actually get money back for moving to a safer area for example.
The point is, your premiums could go up or down when you make a chance. But, you might also have to pay an admin fee to cover the cost of changing your policy.
We know, we know, more fees. The good news is:
- Some insurers don’t charge admin fees.
- You may be able to change your details for free online.
- You shouldn’t have to pay admin fees for changing your name.
Basically, if you need to change anything other than your name, check whether you can do it through your insurer’s website for free first. If you can – happy days! You don’t have to sit on hold for ages, talk to a human, or pay a fee. Frugal introverts everywhere, rejoice!
If you do need to pay admin fees, these are generally in the region of around £30. They (probably) won’t break the bank, but we can totally see why you’d opt for the free (online) version of updating your details where possible.
What are car insurance document fees?
Let’s say you’ve lost access to your policy documents. You want your insurer to re-issue them and maybe even post them to you again. They can do that, but they are entitled to charge you a “duplicate document fee”. Yup, we know. Even more fees.
The good news is, this type of fee is pretty rare now. Most insurers are nice enough to simply re-issue your documents, no questions asked. In fact, when Defaqto looked at 325 comprehensive car policies, they found that 86% didn’t bother charging document fees.
And when Which compared insurers, they found that even the insurers with the highest fees on average did not charge any document fees. So, chances are, your insurer won’t either. But it’s always worth checking you haven’t taken out a policy with the one unicorn provider that’s still charging for this.
What are car insurance credit fees?
When you request an annual car insurance quote, you’ll usually be asked whether you want to pay annually or in monthly instalments. That’s because the price will be different if you choose to pay monthly rather than annually.
Credit fees are the fees you pay if you choose to pay monthly. When you opt to pay monthly, you’re basically taking out a form of credit. You then repay this credit over the year. The credit fees are made up of the interest on your premium as well as any admin fees to arrange your “loan”.
And, unlike document fees, you’ll almost always be slapped with some form of credit fees if you’re paying in instalments. So it pays to pay your insurance in one go if you can. The average driver will save £200 a year if they pay annually rather than monthly. Even more if they’re a young driver with an especially high premium.
But not all of us are made of money, and some car insurance premiums can be steep. That’s why it’s worth getting several quotes, and comparing the overall costs of taking out a policy if you’re planning to pay monthly.
What are car insurance broker fees?
Maybe you’re used to sorting out your annual car insurance on your own. That’s fine and all, but if you’re not sure you’re getting the best deal through the comparison websites, you might be tempted to speak to a broker.
Brokers can get their hands on all sorts of deals you might not be able to access. It’s their job to develop relationships with insurers so they can offer you preferential rates. You could get a great deal through an awesome insurer that you simply would not be able to find on a comparison website.
But, brokers don’t do this work out of the goodness of their hearts. They want to get paid too. So it’s likely you’ll be charged a fee to work with a broker. Usually, this fee is baked into your annual premium.
But in a sense, it doesn’t really matter. If the price you’ve been quoted is still absolutely banging and you know you won’t be able to get it anywhere else, or if you’re after a specialist policy only some providers offer, then a broker might still be your best bet.
An overview of car insurance fees in the UK
Car insurance fees can be an absolute minefield. There are so many different types of fees insurers can charge on top of your premium. But, the good news is that most insurers don’t charge all the fees they can be charging.
Wrapping up, it’s worth taking the time to understand the details of insurance that you’re thinking of buying, and one part of this is the various fees that may come into play.
