Car insurance admin fees are hitting motorists in the pocket

Car insurance admin fees rising

As if the rising cost of car insurance wasn’t enough, motorists are also facing a dramatic rise in admin fees.

New research shows that, since 2012, the cost of making a mid-term adjustment to a policy has risen by 38 percent to an average of £28.25. A material change could include altering a name, address or occupation, or adding or removing a named driver.

Meanwhile, cancellation fees have risen 49 percent over the same period, with the average charge now standing at £60.85. Insurers are legally required to give a 14-day ‘cooling-off’ period, but an administration fee may still be applicable.

Thirty-eight percent of insurance companies even charge a set-up fee for new policies – up from 12 percent in 2012. Motorists are being charged an average £37.63 to cover the cost of arranging a policy.

‘Fees should be proportionate’

The cost of car insurance admin fees

Lee Griffin, founder and CEO of GoCompare, the company behind the research, said: “The car insurance market is highly competitive, so rather than incorporating the costs of certain admin tasks into the basic premium, some insurers make other charges.

“This helps keep premiums down by ensuring that only the policyholders who change or cancel their policy, for example, pay for the additional work required to administer their policy.

“Insurers should be upfront about any admin fees they charge. These should be clearly set-out in their terms and conditions, so drivers are aware of the full costs before signing-up to a policy. Fees should also be proportionate to the cost of the company of undertaking the work.”

Motorists are advised to challenge their insurance company if they think they’ve been charged a disproportionate amount for cancellation or a mid-term adjustment. Some companies may reduce or waive the fees if it means retaining a customer.

If the fees weren’t declared prior to the policy being agrees, a customer can ask the Financial Ombudsman Service to review the case.

Car insurance admin fees overview

  • Adjustment fee: £28.25 (up from £20.51 in 2012)
  • Cancellation fee: £60.85 (up from £40.95 in 2012)
  • Set-up fee: £37.63 (up from £20.66 in 2012)
  • Duplicate documents fee: £13.85 (down from £18.58 in 2012)
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