Drivers who make changes to their car insurance policy, either because of modifications made to the car or making other amendments to their details, are giving £333 million a year to insurance companies, uSwitch has found.
There are currently 14 million British motorists being hit by additional fees on the car insurance
premium each year, paying an average of £22 each for such things as duplicate documents, making simple amendments, or cancelling a policy.
Furthermore, uSwitch has also found that there are no regulations in place to prevent customers being taken for a ride by their insurance provider. The only legislation which protected such individuals was removed from the ICOB (Insurance Conduct of Business) Sourcebook in January of this year; the Financial Services Authority did so on the grounds that they had never been asked to investigate such charges, and removed it to simplify the regulations.
Making simple changes, such as a new name, address, or vehicle details, are classed as 'mid-term adjustments' by insurance providers, and are therefore subject to a fee; however, if individuals did not make these changes, their insurance policy could be deemed invalid.
uSwitch revealed that the fees charged differ greatly across the industry, with some allowing alterations free of charge, and others charging a considerable proportion of the customer's premium. The price comparison site it calling for regulation of this area of the industry, and asks that it be reinstated into the ICOB Sourcebook in order to protect consumers from varying and disproportionate prices.
“Consumers need to know where they stand and the easiest way to do this is for the amount providers charge to be consistent across the insurance industry.“ said Ashton Berkhauer, Insurance Expert at uSwitch.com.
“This would make it clearer for consumers and bring transparency to the market. Currently, making an adjustment to your policy can cost you from £0 to £25 and the price for cancelling a policy mid-term can be unlimited.”
Some motorists may even be unaware that not only will they face a charge for making small amendments to their policy, but that this could also cause a rise in their premiums, with 53 per cent of those who made mid-term changes seeing an aver £39 increase in their annual premium.
Mr Berkhauer concludes: “It is vital that consumers are made aware of these fees and that the insurance industry is made to review and justify their validity. These ‘hidden charges’ and cancellation fees certainly seem excessive and there is a clear need to reinstate the rules around what is a fair charge to really put consumers needs first.”
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