- Millions could be paying more than they think for their car insurance
- Customers paying extra to pay by direct debit and for set up fees, adjustment fees, cancellation fees and even renewal fees
- NFU Mutual, which does not charge any extra fees, analysed data from Defaqto and found only 9 of 321 products – 3% – don’t charge any extra fees
Data from 321 insurance products shows that millions of people in the UK could be paying extra fees for their car insurance.
NFU Mutual, which does not charge any extra fees, analysed data from Defaqto and found that only 9 of 321 products – just 3% – do not charge any extra fees to customers.
Data table
Number of products – 321
Number of products charging a fee of some kind – 312 (97%)
| Charge | Number of products charging | Percentage of products charging | Highest fee | Average fee |
| Direct debit | 306 | 95% | n/a | n/a |
| Set-up fee | 146 | 45% | £350 | £58 |
| Adjustment fee | 239 | 74% | £175 | £39 |
| Cancellation fee | 289 | 90% | £400 | £57 |
| Cooling-off cancellation fee | 165 | 51% | £400 | £42 |
| Renewal fee | 133 | 41% | £100 | £47 |
| Telematics disconnect and removal fee | 14 (out of 62 products) | 23% | £100 | £68 |
| Telematics documentation fee | 2 (out of 62 products) | 3% | £60 | £60 |
| Telematics missed appointment fee | 14 (out of 62 products) | 23% | £60 | £51 |
The most common fees charged are direct debit fees, with 95% of products charging customers more to spread payments throughout the year, and cancellation fees, which are present in 90% of products.
The average cancellation fee is £57, with the highest charge a massive £400, which includes a broker fee and a charge for installing the related telematics device.
Adjustment fees are also charged in over three quarters of car insurance products, reducing the ability of consumers to make changes to their insurance without incurring costs. The highest adjustment fee was £175, which includes a broker fee and a charge for installing a new telematics device, with the average fee coming in at £39.
Well over 40% of products charged set-up and renewal fees, effectively penalising customers for setting up insurance. From products which charge the fees, the average set-up cost is £58 and the average renewal fee is £47.
Many insurance providers – 51% of products analysed – also charge customers for cancelling during the 14-day cooling-off period. This cooling-off period is a legal requirement during which a customer can cancel their policy for any reason. However, over half of insurance products charge customers to do this, at an average of £41 and reaching £400 at the higher end, with this covering cancellation, a broker fee and the cost of installing the related telematics device.
With so many car insurance products charging for common things, with the average fees representing not-insignificant amounts, customers could find themselves on the hook for substantial costs on top of their insurance premiums.
Wendy Yeomans, car insurance expert at NFU Mutual, said: “With the cost of living crisis hitting all our pockets, it’s more important than ever to keep on top of our budgets.
“Many households have cancelled media subscriptions or altered their buying habits to keep spending under control, but many will not be aware they are paying the equivalent of this in extra fees for their car insurance.
“Extra fees like this, which many consumers aren’t aware of, make budgeting more difficult and effectively mean the prices many pay for their car insurance creep up beyond what they expected.
“That is why, at NFU Mutual, we are proud to say we don’t charge any extra fees at all, nor do we penalise customers for paying in the way that suits them best – whether this is a monthly direct debit, lump sum or by cheque.”