By Neil Faulkner
The potential for car insurers to add in extra charges continues even after policies have begun, because of how they deal with any changes to personal details.
Whenever your circumstances change, you're obliged to inform your insurer. Some changes you need to report are:
- Your address
- Your marital status
- How you use your vehicle (e.g. you start using your car to commute or for other business travel)
- Your career (not a change of employer, but a move to a new industry or different occupation)
- Where you usually park the vehicle
- The main driver
- Additional drivers
- Any incidents (even if you decide not to make a claim)
- Any modifications
- The vehicle itself.
In short, anything that might affect your car cover should be reported to the insurer immediately. The only thing you're not expected to report straight away is driving convictions, which you can do at renewal instead.
The cost of these changes
In a recent report, information analyst Defaqto highlighted a rise in the amount insurers are charging for making changes to policies.
It said 61 per cent of car insurers now charge an adjustment fee and the average is £19. Consumer group Which? found that this fee can be as high as £55. You should find out how much an insurer charges for changes before you buy a new insurance policy.
Consider cancelling
The alternative to paying amendment fees is to compare new prices and cancel your car insurance. Overall it may be cheaper to switch, because any change to your circumstances usually makes another insurer instantly better for you.
The amount insurers charge you for cancelling is not always clear. It may be you get a pro-rata refund with no charge, but typically you'll have a cancellation fee deducted. Defaqto says this is £37 on average, but can be as high as £85.
What's worse, it also reports that some insurers still don't give you a pro-rata refund, but a much smaller one. This is despite the Financial services regulator frowning on such practices.
Some insurers may waive the cancellation fee if you make a change that it's no longer willing or able to insure, however be aware that insurers do adopt different approaches to cancellation fees.
If you feel the cancellation terms and fees are too high, you have the right to complain. You may be offered a reduction as a goodwill gesture. If the insurer disagrees and you don't feel it's treating you fairly, you could complain to the free Financial Ombudsman Service (FOS).
The FOS deals with these claims on a case-by-case basis, but it could order the insurer to waive or reduce its charges, particularly if it hadn’t explained its charges clearly at the outset.
