Hard-pressed drivers forced to pay ‘concerning’ £300 penalty for car insurance
Motorists around the UK are facing a “growing divide” between people paying monthly and annually, with expensive costs potentially being spread around.
Data shows that the gap between car insurance customers paying monthly and annually has reached £302 on average.
Customers paying monthly in November 2019 were charged £673 on average for annual cover, while those paying upfront paid just £456 – a difference of £217.
However, the latest data from GoCompare and Which? shows a staggering 39 percent in costs for people in November 2022.
The price difference has increased to £302, with those opting to pay monthly spending an average of £757.60 and annual drivers paying £455.49.
While this is not a universal trend, the more severe price increases could be handed to the people least able to afford them.
Younger drivers tend to pay monthly as the payments are easier to manage and keep track of their finances.
They are also more likely to be viewed as a greater risk on the road by insurers, thus hiking the price up further.
The Financial Conduct Authority (FCA) has also warned that low-income households are more likely to pay monthly and face higher premiums.
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Jenny Ross, Which? money editor, said: “At a time when household budgets are under huge strain, it’s concerning that customers who pay monthly for their insurance could be paying far more than those who pay their annual premium upfront.
“Paying using an interest-free credit card could help to spread the cost of annual premiums.
“Haggling and switching also remain effective ways of bringing down the cost of insurance.
“Which? has a range of free, expert advice on its website to help consumers make their money go further, including when choosing insurance.”
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Which? is concerned about this widening cap and is calling on the FCA to continue monitoring the situation.
The Authority has an obligation to provide fair value under the new Consumer Duty regulations set to take effect on July 31.
Which? suggests that drivers should avoid automatically renewing their car insurance as they are “paying for convenience”.
By haggling with their insurers, they can save money. Alternatively, they can shop around and find the best deal suited to their needs from a competitor.
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