A massive push to lower the cost of premiums on motor insurance is, ideally, great news for drivers. According to recent studies published by consumer comparison group Confused.com, insurance rates have dropped from £678 to £579, approximately 15%, over the past year and are a third lower than 2011’s peak rates. However, many insured motorists end up paying rates significantly higher than what is quoted in their premiums.
Sneaky Rate Hikes
Consumer advocacy groups and watchdogs have examined an unfortunate side-effect of these drastically lower premiums: sneaky fees and rate changes attached to establishing, changing, or even canceling an insurance policy. These fees and rate hikes are significant and bring the actual cost of the policy up to match figures from three years ago.
Nearly half of the forty insurance providers examined have increased their penalties for canceling a policy – some of them charging double or higher than what the penalty was three years prior. Another six providers have attached significant fees to changing a policy – even if the change is purely clerical, such as a change of address or change in marital status. While a dramatic change in a policy – such as moving
to a significantly more crime-laden area, and obviously collisions, may have a dramatic impact on your policy, most of these fees are being charged irrelevant to any tangible cause.
At least one provider, Hastings Direct, has also attached a £20 fee to renewing policies – that is staying with the same company you’ve been a customer with in the past. Despite the fact that nothing has changed in the policy, Hastings Direct is brazen enough to charge a penalty to remain its customer. Other providers are charging a fee for establishing a new policy, such as the AA’s £28 for a new policy.
Often times, the hidden fees and potentials for rate hikes are hidden in the agreements signed by the insured. As such, it is the insured party’s obligation to agree before signing, but the providers attempts to obfuscate these fees has consumers fed up, and rightly so with so many policies exceeding 2011 rates when fees are factored in.
Any insurance provider should be forthright in explaining any potential fees or fluctuations to premiums that the consumer may incur.
Not all insurance providers are price gouging with excess fees, and many are fighting to give the best rates and premiums available. It is critical to shop around, find providers not employing such fees, and even express dissatisfaction to those providers who use hidden fees to jack up premiums.