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)

Are you paying too much for your car hire excess insurance?

Car hire companies

Only 29 percent of motorists questioned in a new study were aware they could take out a car hire excess insurance policy BEFORE they left the UK.

Holidaymakers face excesses of £500 to £2,000 in the event of an accident, with the amount pre-authorised on a credit card for the duration of the hire period. Excess insurance can be arranged at the rental desk, but it comes at a cost.

Arranging excess insurance in the UK is often cheaper than paying for an expensive, but similar, hire car company policy abroad.

The cost leaves many travellers disgruntled, with 70 percent of the motorists surveyed by the RAC describing the excess insurance offered by rental firms as “expensive”.

It’s little wonder, then, that 17 percent of British holidaymakers admit to risking it and not taking out one of the hire car company’s policies. Of those who ‘risked it’, 23 percent said they were worried about the consequences of having to pay such a large amount on their credit card.

‘Usually very costly’

Car hire excess insurance cover

RAC head of insurance Marcus Latchford said: “While rental agreements in Europe generally include collision damage waiver, theft and third-party liability insurance, customers also have to decide whether or not to protect themselves against the large damage excess amount that is temporarily held on their credit card while the car is on hire.

“Taking out the rental company’s excess insurance policy is usually very costly which leads to many travellers just taking the chance that nothing bad will happen to their hire vehicle and the excess will not be charged to their card.

“By far the best course of action is to take out specialist insurance to cover the excess amount and any additional damage repair costs incurred via a specialist policy bought in the UK. The trouble is not enough people realise this is an option so they end up losing out financially by buying expensive hire car excess insurance policies, often with a lower level of cover.

“We need to make people aware that very affordable UK alternatives exist so it becomes second nature to take out a policy before travelling.”

The RAC has launched its own car hire excess insurance, with cover available from £2.99 a day or £42.99 for an annual policy. In contrast, rental companies charge an average of £9 a day for similar cover.

How to ensure a successful car insurance claim

How to ensure a successful car insurance claim

Around 43,000 car insurance claims are turned down every year, leaving motorists out of luck and out of pocket. 

Conversely, insurers pay out just under £22 million for private car insurance claims every day, which equates to just under £3,000 per claim. 

If you want to avoid being one of the two percent of motorists who have their car insurance claim rejected, take a look at these five ways to ensure a claim doesn’t get turned down.

Buy the right policy

Not having the right cover in place is one of the most common reasons why car insurance claims are turned down. Don’t just buy on price – make sure you consider all your needs. For example, if you drive to work, make sure the policy includes commuting.

The claim value being below the policy excess is another reason why claims are rejected. Be sure to check your voluntary and complusory excesses before arranging cover.

Read the small print

car insurance claim form

It’s always tempting not to read the small print, but you could be missing out on what isn’t covered by the policy. The policy document will outline any procedures you need to follow, such as notifying the insurer if you change your job or move house.

Modifying your vehicle could invalidate the policy, so notify your insurer if you fit a towbar. Similarly, if you exceed your agreed annual mileage, you’re at risk of having your car insurance claim rejected.

Secure and maintain your car

Insurers expect drivers to take steps to prevent accidents, theft, loss or damage. A theft claim will be rejected if the key has been left in the ignition or the driver is found to have been under the influence of drink or drugs.

A car insurance policy is invalid without a current MOT certificate unless the vehicle has been declared SORN and the policyholder has arranged laid-up cover.

Act quickly and follow the procedures

Car insurance Brexit

In the event of a claim, follow the procedure outlined in the policy document and report losses promptly. The insurance company will guide you through the claims process and deal with a third party on your behalf.

Be sure to write down anything relating to an accident; dashcam footage and photographic evidence can be extremely useful in the event of a claim.

Be honest if you want a successful car insurance claim

Don’t bend the truth when arranging cover or making a claim. Providing incorrect information or omitting details could invalidate your insurance, as could exaggerating the value of a claim.

If an insurance company finds that you have been dishonest, they are entitled to decline the entire claim.

‘Insurance is complex’

Matt Oliver from GoCompare, the company behind the car insurance advice, said: “Insurance is complex, but when applying for cover, it’s essential to be honest, and take the time to read through the policy details to make sure it covers everything you need and has excess levels you can afford.

“The information you give when applying for insurance is used to determine the cost of cover, so omitting information or bending the truth to get a cheaper deal could land you in trouble if you need to make a claim.”  

How to save money on your car insurance

How to save money on your car insurance

Car insurance is one of the biggest expenses associated with running a car, so it’s natural that you’d want to know how to save money on your annual premium.

No specific advice can guarantee a low premium for all, but here’s our general guide on how to – legally – save money on your quote. And the things you definitely shouldn’t do…

Buy the right car

This seems obvious and, of course, there’s probably a whole other article here. Generally speaking, the bigger and more powerful the engine, the more expensive the insurance. Likewise, a more prestigious and expensive car will bump up the cost, as will any model considered an accident-magnet. Ask any new driver who tried to insure a Citroen Saxo after 2005.

If saving money on car insurance is your prerogative, food-blender-powered hatchbacks will be cheaper than gas-guzzling coupes. But for many reading here, that won’t matter. You have your car and simply want the cheapest quote. There is hope for you, though. Read on…

Shop around to save money

Too many are complacent about car insurance. We don’t put in the legwork, shop around, bounce between providers. That’s exactly what we should be doing to save money.

Get on the price comparison sites but also contact companies directly. It’s mostly up to chance which provider will give you the best deal, so it’s worth talking to all of them.

Get your story straight

cheap car insurance

There are a number of things you must tell an insurer about yourself and your driving career. These include: how old you are, how long you’ve been driving, if you’ve had any accidents and when, what you do for work, where you live, how much you drive, where the car is parked… All this and more comes in to play.

While you must tell the truth, there is leeway to be explored. Your career for instance, can be listed in a number of different ways. A photographer is a videographer is a multimedia assistant. A bricklayer is a builder is a labourer  and so on. Play with the variables, but don’t stray from the truth.

It’s worthwhile working out how far you drive, too. The number of miles you cover in a year can affect your quote. Lower is better, in most cases.

Different types of policy

There are generally two types of policy: third-party, fire and theft, and fully comprehensive. If your car is worth anything over £500, we’d recommend fully comprehensive.

Third-party policies do not cover the cost of repairing or replacing your vehicle in the event of an accident – only the car or object you crash into. Third-party is often a last resort taken by new drivers to get their premiums down.

Multi-car policies are interesting, however. Whether you’re living with your parents or have flown the nest, they can offer significant savings, saving you money on your car insurance.

Young drivers can also get on their parents’ policy – fully-comp, with the ability to earn a no-claims bonus – for potentially a lot less than insuring themselves. Likewise, if you live with a partner and you both drive, it’s definitely worth checking whether you can share a multi-car policy.

Get a black box to save money

It’s not the most elegant or convenient of solutions, but having a black box watching your every move behind the wheel often prompts insurers to charge you less. It’s become a mainstay of the newly-passed young driver.

Move somewhere cheaper

car insurance

Location is a big factor in the cost of car insurance. Maybe you should consider moving away from Carjack Alley and closer to Upstanding Avenue.

Don’t crash

Obviously, not crashing is a good thing in general. Never mind the immediate stresses of a prang, for the next three years (at least), your insurance will be more expensive.

All thanks to the no-claims bonus that you shattered – along with someone else’s headlight…

Get older

With age and experience come a great many things, including cheaper car insurance. Both 21 and 25 are big milestones when it comes to lower quotes.

If all else fails and you can afford to go without a car, sit on your licence until you’re a bit older. Pass your test as early as possible, though. Remember, they ask how long you’ve had your licence when totting up quotes.

How not to save money on your car insurance…

Car insurance

Don’t lie on your policy, about anything – simple as that. Don’t lie about modifications, the miles you’re doing, where you live, what you do, where the car is parked and so on.

Any untruths will invalidate your policy in the event of an accident. It’s not worth the risk.

Car hire excess insurance: why it’s cheaper to buy before you fly

Car hire excess insurance policy

Arranging car insurance excess cover at the rental desk is an expensive business. It’s also a needless expense, as highlighted by one new car hire excess insurance policy.

Launched by RAC Insurance, the cover provides excess protection of up to £6,000, plus protection against fire, theft and vandalism. It costs £42.99 for an annual policy, or £2.99 a day.

Holidaymakers face excesses of between £500 and £2,000 in the event of an accident. The excess is pre-authorised on a credit card for the duration of the hire period.

Car hire excess insurance cover

Excess insurance can be purchased at the car rental desk, but comes at a cost.

This leaves customers with one of two options: take a financial hit by taking out the excess policy or risk not doing so in the hope that nothing happens to the vehicle during the loan.

‘Not enough people realise this is an option’

Car hire companies

Arranging car hire excess insurance BEFORE you travel is a cheaper option, with RAC Insurance the latest provider to offer cover. Marcus Latchford, RAC head of insurance, said: “The trouble is not enough people realise this is an option, so they end up losing out financially by buying expensive hire car excess insurance policies, often with a lower level of cover or, worse still, having to pay the excess.

“We need to make more people aware that very affordable UK alternatives exist, so it becomes second nature to take out a policy before travelling. This is why we decided to enter the market as we believe a hire car excess policy with the RAC’s name on it will give people some much-needed peace of mind when renting vehicles.”

RAC policy: the details

  • Excess protection: up to £6,000
  • Protection against: fire, theft and vandalism
  • Cover for bodywork, tyres, roof, windscreen and undercarriage
  • Cover for towing, breakdown and mis-fuelling excess costs
  • Up to 65 days’ continuous cover on any one rental agreement
  • Option to book daily single trip and annual policies up to 180 days in advance
  • Cover for up to nine additional drivers as standard

Car hire excess insurance isn’t new; RAC is just the latest company to offer protection.

Other policies are available online: simply search for ‘car hire excess insurance‘ and select the cover that’s right for you.

Fewer people caught driving without car insurance

Fewer drivers caught without insurance

There’s been a large drop in the number of motorists caught driving without insurance, according to figures released by RAC Insurance.

A Freedom of Information Request sent to the DVLA (Driver and Vehicle Licensing Agency) revealed that 79,713 people were caught driving without insurance last year – a huge drop from the 118,698 found breaking the law in 2017.

Numbers had been falling since 2012, but there was a 22 percent increase in the number of motorists driving without insurance in 2016, followed by a smaller five percent rise the next year.

It’s illegal to drive a vehicle on a road or in a public place without at least third-party insurance, and motorists are likely to receive a fine of £300 and six penalty points if they’re caught without valid cover. Police also have the power to seize and destroy a vehicle that’s being driven without insurance, while a driver could face an unlimited fine and disqualification if the case goes to court.

Worryingly, a total of 872 people under the age of 17 were caught without insurance in 2018 – hardly surprising given the fact that these ‘drivers’ aren’t even old enough to have lessons on a public road.

At the opposite end of the spectrum, a 96-year-old motorist was found to be driving without insurance in 2018 – the oldest person caught for the offence since 2012.

‘Good news’ for motorists

car insurance claim form

RAC Insurance director Mark Godfrey said: “It can only be good news the number of people driving without insurance has dropped significantly in the last year and is now at its lowest in at least seven years. This should help to keep premiums down for every driver and we hope this continues in the years ahead.

“From 2012 to 2015 there was a steady downward trend in the number of ‘driving without insurance’ offences, but there was then an increase in 2016 followed by a six-year high in 2017 which appears to be directly linked to the increase in the price of insurance at that time.”

Drivers caught without car insurance (2012-2018)



Revealed: the best and worst car insurers for claims handling

car insurance claim form

You never know how good a car insurance company is until you make a claim. Which is why new research into the best and worst insurers for claims handling could prove to be invaluable.

Consumer group Which? surveyed 2,111 car insurance customers who had made a claim in the past two years. They were asked about their experience during the claims process and how likely they would be to recommend their provider.

This kind of study is worth considering when you’re faced with a stream of quotes on a price comparison website. Often, it pays to look beyond the price.

The AA finished bottom of the table for car insurance, with a customer score of 55 percent. A third of respondents felt their claims were handled more slowly than anticipated. The result: a disappointing two-star rating from Which?.

Axa was voted the second worst car insurer for claims handling, followed by Hastings Direct and Allianz. All three were awarded a damning one-star rating for communication.

Car insurance Brexit

At the opposite end of the table, NFU Mutual was rated the best insurer for claims handling, with Which? awarding a maximum five-star rating for speed of handling claims and a four-star rating for communication.

Interestingly, NFU Mutual also topped the table for home insurance (Which? surveyed 1,456 home insurance customers).

Gareth Shaw, head of money at Which?, said: “When things go wrong motorists and homeowners should be able to count on their insurer, but it is concerning that some providers make the claims process difficult – with muddled or slow communication and poor customer service.

“Anyone unhappy with how their insurer handled their claim should shop around when it is time to renew – do your research and find an insurer that will make the claims process as stress-free as possible.”

The best car insurance companies for claims handling (best first):

  1. NFU Mutual
  2. RSA
  3. LV=
  4. Direct Line
  5. Co-op

The worst car insurance companies for claims handling (worst first):

  1. AA
  2. Axa
  3. Hastings Direct
  4. Allianz
  5. Ageas

The AA told Which? it did not feel the research reflected the feedback it received from customers, while Axa said it would be making changes to improve its customer service.

The five cheapest cars for young drivers to insure in 2019

cheapest cars insurance for young drivers

In revealing how much young people spend on getting on the road for their first year of driving, Admiral also spilt the beans on the cheapest used cars for new drivers to insure.

All of the top five cost less than £650 per year which, with four-figure first-year premiums still fresh in the minds of some at team Motoring Research, sounds pretty good value.

For reference, Admiral concluded that the average cost of insurance for a young driver’s first year on the road was £1,889. If you’re a lad, you’re suffering at an average cost of £2,294 and if you’re female, you’re still well into four figures at £1,660.

So without further delay, let’s reveal the secondhand cars that could hack insurance for young drivers…

Volkswagen Fox – £638

cheapest cars to insure for young drivers

At number five is the Volkswagen Fox. We’re glad that some of the other cars on this list are a bit more appealing. The Fox was, to be honest, a bit of a low point in VW’s tiny car career over the past 20 years. After the excellent Lupo and preceding the lovely Up!, the Fox is a bit lacklustre.

Still, you can’t argue with £638.20 per year to insure.

Fiat Panda – £635

cheapest cars to insure for young drivers

Now we’re getting a bit more funky. The Panda has to be one of the most lovable small cars on the road. Italian quirkiness mixed with those cute boxy looks to make for a car that appeals to anyone. You can even get one that’s geared for rougher terrain.

Just £635 a year to insure isn’t bad going either. What is a shame is how (not-so) safe they are…

Citroen C1 – £632

Citroen C1

More cute European quirkiness comes in the form of the Citroen C1. This was was the product of a three-way collaboration together with Toyota and Citroen’s sister firm, Peugeot. The Japanese firm got the all-new tiny Aygo, and Citroen and Peugeot got new small entries to their respective C1 and 107 ranges.

The C1 costs just £632 a year to insure. And if that’s still £4 too expensive for you, well, you’re in luck…

Peugeot 107 – £628

Peugeot 107

… Because curiously, the Peugeot costs £628 a year to insure, just undercutting the largely-identical Citroen. It’s likely down to small differences in parts prices, the different profile of drivers for each brand, and such like.

Notable for its absence here is the Toyota Aygo. Perhaps indicating Toyota charges a bit more for parts and a bit more for labour?

Volkswagen Up! – £618

cheapest cars to insure for young drivers

Coming full circle, we arrive at another Volkswagen – this time the superb Up! This, like the tiny Peugeot and Citroen above, was a collaborative effort, with the Mii and Citigo versions being sold by Seat and Skoda respectively. Neither feature in this top five, interestingly, but we can’t imagine they’re too much more expensive.

A brand-new Up! on PCP for well under £200 a month, combined with that low £618 to insure should both help placate young driver’s hunger for financed cars and help keep costs down. 

Insurance auto-renewals cost UK drivers £1.2 billion

Insurance renewal robbery

Insurers are costing UK motorists £1.23 billion every year with expensive auto-renewals on car insurance policies. 

Research by Go Compare has revealed a ‘loyalty trap’ that around 4.6 million fell into at their last renewal. These drivers could have saved up to £262 per person if they’d shopped around.

Misplaced loyalty

Nearly a third of the 62 percent who let their policy roll over didn’t query or shop around because of a feeling of loyalty to their insurance providers.

That beats the 22 percent who lacked the confidence to switch, the 15 percent who assumed other insurers wouldn’t be able to compete on price and the 10 percent who couldn’t be bothered because of the hassle.

The lowest earners pay the most

Those who pay for their insurance monthly (and more often than not, therefore, pay more) are 54 percent more likely to allow their policy to continue past renewal. 

Drivers from the lowest earnings groups are 38 percent more likely to pay monthly, and in turn will pay out an average of 18 percent more in fees and interest as a result. That’s not even taking into account the costs of letting a policy roll over.

It doesn’t hurt to ask

Insurance renewal robbery

You can save serious money simply by getting other quotations, going back to your insurer and threatening to leave.

Inflated renewals are a liberty that insurers are often allowed to take. As such, they will often be happy to re-quote on the threat of your departure, just to keep your custom. Loyalty is fine, just don’t let them take advantage of it.

A few tips from Go Compare, condensed by us:

  • Don’t accept your renewal quote without checking the price is competitive
  • Note your renewal date and give yourself time to check prices
  • Check the small print, make sure there are no hidden costs
  • If you can only afford monthly payments, consider a low-rate credit card to pay off over the course of a year

Safer drivers do like to be beside the seaside

WRC Llandudno

Motorists hoping to avoid a car accident should move to the seaside, according to research conducted by ClassicLine Insurance.

New data from the specialist insurer shows that it received the fewest amount of claims from drivers in the Scottish coastal city of Dundee, with the Welsh resort of Llandudno finishing a close second. Other locations appearing in the top ten include Blackpool and Aberdeen.

Predictably, London is the place to avoid if you fancy a stress-free driving experience – six of the capital’s districts appeared in the bottom ten, with NW and N the most accident-prone postcodes.

‘Something in the sea air’

Chevrolet at the seaside

Ian Fray, managing director at ClassicLine Insurance, said: “Our snapshot of UK motoring indicates that drivers in Dundee are the safest behind the wheel, whereas Londoners are most likely to be in a motoring prang.

“It also highlights that there must be something in the sea air which makes drivers more chilled out. Perhaps living near the coast makes people more relaxed and also more laid back in their driving habits.”

Ian added: “London is one of the most congested cities in the world and presents its very own stresses and unique driving challenges, which might explain why so many areas around the capital have increased accident driving claims with us.

“Given this scenario, our advice is to head to the seaside this weekend!”

The top ten tables in full

 Ten postcode areas with the lowest accident claim frequencyTen postcode areas with the highest accident claim frequency
1.DD DundeeNW London
2.LL LlandudnoN London
3.TR TruroE London
4.KA KilmarnockW London
5.HU HullL Liverpool
6.FY BlackpoolSW London
7.NP NewportHX Halifax
8.DT DorchesterSE London
9.AB AberdeenSR Sunderland
10.LA LancasterWD Watford