UK Car Insurance Articles
search advanced search

Home >> Car Insurance Articles


How to uncover hidden costs before buying car insurance

Article by Simon Christopher
Article added: 8/10/2010 - Last updated: -
Rating: 3.00 3.00 (5 votes)


fine printIn theory its easy to choose a car insurer based on price: you simply look to see which offers the lowest premium for your circumstances, make your payment, and sit back with both peace of mind and some spare cash.

In reality, there are a host of hidden costs, both for specific incidents and for all policyholders. Here are three of the most important things you need to look out for to make sure you compare the true costs.

Cancellation Charges

Which? Money recently found almost two-thirds of companies charge a fee for cancelling a policy, rather than simply refunding the "unused" portion of your premiums. The average fee was £40, though some providers charged up to £85.

Other providers, while not having a flat fee, use systems that don't refund the premium proportionally. This could mean somebody cancelling half-way through a one year period only gets 20% or so of the premium, and somebody with less than three months to go might not get any money back. Again, it's hard to know if you'll ever need to worry about this, but it does mean that if you know you'll not need insurance for a full year (for example, if you are moving abroad), you can't simply take out a full-year's insurance and expect to cancel without any penalty.

Monthly Premium Interest

While many drivers find it convenient to pay annual premiums in the form of a monthly direct debit, such packages vary immensely in cost. While some providers charge no interest for such facilities, others charge very uncompetitive rates: as much as 37% in the Which? survey. While this shouldn't mean you rule out an otherwise good value policy, you should consider whether it might be cheaper to borrow the money and pay the entire premium up front. Remember that if you get the cash via an overdraft or credit card, you'll only pay interest until you can afford to pay the money back. If you sign up to monthly payments with the insurer, you're locked in to the full year's interest charges.

Policy Amendments

The Which? survey looked at 151 car insurance providers and discovered that 105 apply a charge for amending your policy. This can cover simple changes such as adding a named driver, or even changing your address if you move house.  The highest fee among the surveyed firms was £55.

While it's sometimes hard to predict if you'll need to amend a policy, if you know you'll be moving house in the next few months, it may be worth looking at amendment fees as this could make the difference between two closely-priced policies.

PLEASE NOTE: The guidance published in this article is for information only and does not constitute financial advice or a recommendation of any particular car insurance product or company. If you are in any doubt please consult an independent insurance adviser. A database of advisers in your area is available at www.unbiased.co.uk

Copyright UK Insurance Index http://www.uk-insurance-index.co.uk. All rights reserved.


comments about this car insurance article

Comments About this Article:

 Add a Comment


share this car insurance article

Share this Article:



rate this car insurance article

Rate this Article:


Please rate this article between 0 and 5
with 5 being top.
All ratings received for this article.

all categories ALL CATEGORIES
A-Z Categories

popular categories POPULAR CATEGORIES
Car Insurance
Home Insurance
Life Cover
Mobile Phone Cover
Pet Insurance
Travel Insurance

directory categories DIRECTORY CATEGORIES
Business
Event
Health
Home & Property
Insurance Brokers
Life & Protection
Marine
Motor
Non UK Insurers
Pet & Animal
Personal Possessions
Specialist Cover
Sport
Travel

review categories REVIEW CATEGORIES
Business
Car & Motor
Health
Home
Insurance Companies
Life Cover
Motorcycle
Pet & Animal
Possessions
Sport
Travel

article categories ARTICLE CATEGORIES
Business
Car & Motor
General
Health
Home & Property
Insurance Awards
Insurance Guides
Life Cover
Pet & Animal
Travel

news categories NEWS CATEGORIES
Business Insurance News Feed Business News
Car Insurance News Feed Car and Motor News
General Insurance News Feed General News
Health Insurance News Feed Health News
Home Insurance News Feed Home & Property News
Life Insurance News Feed Life Cover News
Pet Insurance News Feed Pet and Animal News
Travel Insurance News Feed Travel News

FEATURED SITES

CompareTheMarket Car Insurance Comparison
CompareTheMarket.com
CompareTheMarket compares your details and needs with over 400 car insurance policies within minutes to save you time and maybe money.

latest listings LATEST LISTINGS
Octagon Insurance
Quote Me Happy Car Insurance
Protect Your Bubble Car Insurance - 40 cash back*
RSA echoice car insurance
Your Cover Car Insurance from Allianz

latest reviews LATEST REVIEWS
Heritage Classic Car Insurance
Age UK Car Insurance
Carole Nash Bike Insurance
1st Central Car Insurance
One Quote Direct Car Insurance

latest articles LATEST ARTICLES
Getting the best value GAP insurance
5 mistakes that could instantly void your car insurance policy
Is your job title increasing your car insurance premiums?
A closer look at the new compulsory motor insurance rules
A closer look at the new motor insurance gender equality rules



Home | Privacy & Cookies | Terms of Use | Contact | Submit Site | Advertisers

Page protected, do not copy

This website uses cookies to ensure a reliable browsing experience. If you continue to use this website you are consenting to us using cookies in this way. To find out what cookies are, which ones we use and why we use them please click here.

Copyright © 2017 UK Insurance Index. All rights reserved.
All directory listings, articles and reviews are provided as information only and do not constitute advice or a recommendation of any product or provider. If you use these insurers, we take no responsibility and give no guarantees, warranties or representations, implied or otherwise, for the content or accuracy of these third-party web sites or companies. If you have any doubts you should consult an authorised independent financial adviser for advice based upon your individual needs and circumstances. A database of advisers in your area is available at www.unbiased.co.uk.