Does Your Car Insurance Have Hidden Costs?

Tue 21st Dec 2021

British drivers are being urged to check the small print of their motor insurance policy as a growing number of insurers are including hidden extras of more than £60.

Analysis from financial information service Defaqto has found that almost half of insurance policies are now charging a ‘set-up’ fee for taking out insurance and many car owners don’t even know they are paying for it when they start, change or renew a policy.

In 2016 there were only 14 per cent of policies which included a set-up fee, but five years later that has risen to 44 per cent and 10 per cent of the extra charges are more than £60.

It’s not just set-up fees, insurers are also adding on ‘renewal fees’, while those who even cancel their policy within the 14-day cooling off period can be hit with a cancellation fee. Other hidden fees could also induce an adjustment fee if you need to change your policy halfway through a policy.

 “With new taxes relating to emissions and rules on what you can and can't drive, many people in the UK are buying new cars this year but could run the risk of being caught out with extra costs,” said Mike Powell at Defaqto.

“With the greater use of price comparison sites, often customers are looking for the cheapest deal and not reading the small print on fees.

“It is worth taking your time when choosing a policy and find out exactly what you are going to be charged. 

“This will probably be the most time-consuming part of the purchasing process, but it could be the most important.”

Defaqto advises all who purchase car insurance to check policy documents, Terms of Business which can often be found on the insurer’s website.