Spreading the cost of car insurance can push up premiums Go compare with our comparison table

Spreading the cost of car insurance can push up premiums

19 August 2010 / by Rachael Stiles

Some drivers who pay their car insurance by direct debit could end up paying more than they bargained for because not all car insurance providers are clear about the costs of paying monthly.

Car insurance providers should clarify the cost of paying by direct debit, according to financial research company Defaqto, which has released a report addressing the challenges currently facing the car insurance sector.

Monthly instalments offers motorists a way of budgeting for their car insurance more easily, instead of having to pay the entire premium in one go; some insurers do not charge extra for this, but others do, with an average added cost of between eight and 11 per cent on top of the original premium.

Despite paying by direct debit pushing up premiums by a significant margin, eight per cent of the car insurance policies on the market do not state how much it costs for the privilege, Defaqto's research found.

The report – 'The motor insurance industry; at a crossroads' – also notes that this extra cost is in addition to other charges, including fees for adjusting a policy, duplicate documents, cancellation and renewal.

Mike Powell, author of the report and Defaqto's insight analyst for general insurance, said: "What should be a concern for the industry is the number of policies where the level of fees to be charged is unclear to the consumer. Professional researchers sometimes struggle to find this information, so what chance does an uninitiated customer stand?"

© Fair Investment Company Ltd

ProviderSpecial OffersGet Quotes

5 Star car insurance from £185 – That’s all 10% paid for our standard cover* .
You could save up to 20% online - 36% of customers are expected to receive the maximum saving**

Get Quotes >
Save up to £1072 on Car Insurance.

10% of consumers could achieve this saving. Based on Online independent research by Consumer Intelligence during 1st November 2017 to 30th November 2017. Underwritten by U K Insurance Limited

Get Quotes >

99% of customers would buy again from LV= - Reevoo

Benefits include UK call centres, 24/7 claims helpline, unlimited cover for factory fitted phone, audio and sat nav equipment, replacement child car seats, and European car insurance cover. Tailor the cover to suit you with optional extras, such as Motor Legal Expenses, Guaranteed Hire Car, increased Personal Accident cover and Breakdown cover.

Get Quotes >

Don’t get caught out when you break down. Churchill offers free breakdown service to new Motor customers
First year Breakdown service (roadside only), provided by Green Flag, new policies only. Breakdown chargeable at renewal. Underwritten by U K Insurance Limited. Terms & conditions apply

Get Quotes >

Save 15% Online††
No claims discount up to 75%.

Get Quotes >

Comprehensive cover available from just £152 a year***.
5 Star Rated Comprehensive Cover, you'll benefit from the following as standard: Uninsured driver cover, Vandalism cover, Guaranteed replacement car, Emergency any driver cover, Cover for driving in the European Union for an unlimited period.

Get Quotes >
New customers can get 12 months' breakdown cover for the price of 6 when they buy AA Car Insurance. You also get access to member benefits, including up to 20% off at Moto service areas. Get Quotes >

Get Comprehensive Car Insurance Quotes Online.

Get Quotes >
Free Annual Roadside Assistance and Recovery Breakdown Cover worth £49.
Over 50s save at least £50.
Get Quotes >
With lots more cover now included as standard, AXA car insurance offers you extra reassurance on the road.
If your car’s hit by an uninsured driver, you’ll keep your no claims discount and get back your excess with AXA’s uninsured driver promise* – only with our comprehensive car insurance (*We will return any No Claims Discount and Excess if you are not to blame – you will need to provide the make, model and reg number of the other car. T&Cs apply.)
Get Quotes >
Confused.com compare prices from over 130 motor insurance providers to find you their best dealGet Quotes >
Save up to £230 on your car insurance (51% of consumers could achieve a saving of up to £229.96 with Gocompare.com car insurance based on a comparison of at least 40 companies)Get Quotes >