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Uncategorised – millions face paying admin fees of up to £50 to renew car insurance

By 7th August 2017No Comments
Loyal customers face extra fees of up to £50 a year as a result of sticking with their existing insurance company, a (MSE) investigation reveals – with firms such as Budget, Hastings, Saga and Swinton among those to add on ‘admin fees’ at renewal.

In a recently published article, MSE has identified at least nine companies that charge an extra fee on top of the usual car or home insurance premium.

MSE approached around 20 major insurers and brokers to ask if they charged an admin fee simply for renewing. Nine said they did, with the fees costing up to £50, for those who bought their car insurance from Budget.

Here’s the list in full: extra admin fees charged when renewing a car insurance policy 

Auto Direct (owned by Ageas): £25
Bluefin (owned by Axa): £27.50-£35
Budget:    £50*
Direct Choice (owned by Saga): £10
Hastings: £20*
Kwik Fit Financial Services (owned by Ageas): £35 (for instalment customers)
Saga: £20
Swinton: £25    
Towergate: £10 (for classic cars)

* Budget and Hastings say this is an admin fee also charged to new customers starting a policy

These fees are in addition to the premium paid, which can often be significantly more if renewing, as the best prices are usually for new customers.

One other company – First Central – said it charged a £50 admin fee to renew a car insurance policy. However, it guarantees that renewal premiums will be cheaper than new policies on a like-for-like basis – something the other companies listed above were unable to promise.

Guy Anker, managing editor of MSE, said:

“Auto-renewal is often a rip-off, and this investigation shows those who do it often face a double whammy, with extra renewal fees making it even worse.

“This once again proves what we’ve long said – you should simply never auto-renew, but look around to find the best overall deal instead.”

An ombudsman spokesperson told MSE:

“We do receive complaints about policies renewing automatically and fees being charged. Usually the consumer will complain that they weren’t aware the policy would auto-renew. So we’ll check to see what happened.

“Although we can’t tell an insurer at what level to set their fees, we can check to see whether a renewal fee seems excessive in the circumstances.”

So how exactly do these insurance companies justify charging renewal fees?

A Saga spokesperson told us that its £20 renewal fee was previously included within the overall price of a policy. The firm says around 20% of its motor insurance customers pay less at renewal even without new business discounts.

A spokesperson for Hastings said the fee it charges is an “arrangement fee” which is also charged to new customers when they first take out a policy. Budget also told us that its “administration fee” of £50 is for new and existing car insurance customers and says the fee is included within the overall price quoted.

None of the nine companies listed in the table above could guarantee that, aside from the renewal fee, existing customers wouldn’t pay more for their premiums than new customers on a like-for-like basis.

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Tim Kelly

Tim is a highly qualified Independent Engineer with over 20 years experience as an Engineering Assessor of damaged vehicles.

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