Consumers in the UK are paying a fortune to car insurance firms simply for making some necessary alterations to their policies, according to a recent report. Consumers seem to be stuck in a catch 22 situation, where making changes to their policy will cost them a significant price in some cases, but failing to make these alterations could result in the insurance policy becoming invalid.
Recent research has shown that around 60% of drivers, which comes to around fourteen million drivers, have to make changes to their policy mid-term, and insurance firms are raking in around £333 million as a result of these changes being made. There are charges imposed to various changes, and the cost of making the changes can vary from one provider to another. Some providers do not charge for certain changes, whereas others do, so the fee structure can differ from one provider to another.
Previously the Insurance Code of Business stipulated that customers must not be charged excessive fees, but this clause was recently taken out of the code, leaving the system open to abuse.
One industry official said: “These ‘hidden charges’ and cancellation fees certainly seem excessive and there is a clear need to reinstate the rules around what is a fair charge to really put consumers’ needs first. Consumers need to know where they stand and the easiest way to do this is for the amount providers charge to be consistent across the insurance industry.”
The different costs for making changes to an insurance policy mid-term include an average of £12 for the provision of duplicate documents, £17 for making adjustments such as name or address charges, and around £38 for the cancellation of a policy.
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