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Drivers stung by sneaky extra car insurance fees

By Stephen Turvil | December 28, 2021

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Expensive setup, renewal, and cancellation fees are increasingly added to car insurance policies in the UK

Drivers stung by sneaky extra car insurance fees

Car insurance companies increasingly added extra charges such as set up, renewal, and cancellation fees in 2021 throughout the United Kingdom, finance information company Defaqto warned. In 2016, 14% of policies had a set up fee motorists paid as they signed on the dotted line. This rose to 44% in 2021. Many of the set up fees were high. For 2021, 10% of policies charged £60 or more compared to 4% in 2016. The table below reveals more examples.

Set up fees

Charge 2016 2021
No charge 86% 56%
Less than £20 2% 1%
£20 to £39.99 6% 25%
£40 to £59.99 2% 8%
£60 or greater 4% 10%

Source: Defaqto

Renewal fees

Drivers were also charged a renewal fee if they stayed with the same insurance firm for more than a year, rather than swap to a competitor. In 2021, 43% of policies included a renewal fee compared to 9% in 2016. Once again, motorists had to pay considerable sums to renew. In 2021, 8% of policies charged £40 to £59.99 compared to 2% in 2016. The table below shows more examples.

Renewal fee charges

Charge 2016 2021
No charge 91% 57%
Less than £20 1% 1%
£20 to £39.99 6% 26%
£40 to £59.99 2% 8%
£60 or greater 0% 8%

Source: Defaqto

Cancellation fees

Drivers that cancelled their policies within the initial cooling off periods were charged too, Defaqto added. In 2021, 51.5% of policies charged to cancel. 3% asked £60 or more. Additionally, drivers were routinely charged to make changes to their polices once they were running. Examples included adding named drivers, moving to new addresses, or switching vehicle registration numbers.

Car insurance advice

Defaqto stressed that it is important to check what you can be charged before starting a policy. You cannot then be caught by surprise. Such information is often available via a terms of business document, policy document, or the company’s website. If not, speak to a person on the phone and ask for any charges to be confirmed in writing. Defaqto Insight Consult, Mike Powell, stated: 

‘Take your time when choosing a policy and find out exactly what you are going to be charged. This will likely be the most time consuming part of the process, but it could be the most important’.

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