Home and car insurance providers are charging consumers excessive “hidden fees” for basic policy changes and renewals, according to a new investigation by Which? magazine.
The consumer watchdog examined the terms and conditions on the websites of 39 car insurers and 34 home insurance firms and found they often charge expensive fees to make minor amendments to policies.
AXA and Swiftcover, for example, charge customers a flat fee of £30 to simply change their address, update their surname or change the vehicle covered by their motor insurance (unless updated online).
Which? also discovered that some insurers, including 50plus Insurance Services and Hastings, charge fees of up to £10 for renewing policies, in addition to a £10 setup fee, while others hit customers with charges of up to £75 just to cancel their cover.
Furthermore, a number of insurance firms charge high levels of interest to people who opt to pay by monthly instalments, with the study showing that Budget Insurance, AXA and Swiftcover all charge between 29.3 per cent and 32.3 per cent interest for their monthly payment options, depending on the insurance policy .
To make matters worse, Which? found that insurers fail to clearly highlight these extra charges clear on their websites, making it near impossible for customers to compare like-for-like and make an informed choice.
Commenting on the alarming findings, Which? chief executive Peter Vicary-Smith said: “It’s a disgrace that insurers charge exorbitant fees to make basic changes to a policy. These charges should reflect the real cost to the company and not a way of making easy money from consumers who are already struggling with high and rising insurance premiums .”
“We want insurance companies to be clearer about the fees that they charge and stop hiding the details away in pages of terms and conditions.”
He added: “The new regulator, the Financial Conduct Authority, must ensure that any charges reflect the actual cost incurred by the insurance provider .”
