Drivers are seeing their car insurance policies becoming more expensive due to sneaky costs on top of their annual policies.
Several motor insurers have begun charging for administrative tasks, including setting up or renewing a policy.
Several drivers don’t fully understand the prices being added to their policies, causing their overall cost of insuring their car to increase. These are listed in the small print of the contracts, but many drivers have admitted to not checking.
GoCompare has recently announced that the number of insurance companies charging an admin fee is rising, along with the price they charge.
The comparison site reviewed the 332 comprehensive car insurance policies on the market and compared the admin fees from last year.
In March 2022, only 39 insurance deals were charging a set-up fee of more than £60, which has now risen by more than 50% to 59 policies.
In March 2022, 34 policies charged a renewal fee of more than £60, which has also risen with 42 policies.
The number of policies that don’t charge a set-up fee has also decreased from 195 to 181.
Due to regulations brought in in January 2022, insurers are allowed to charge higher fees.
This regulation banned insurers from charging renewing customers more than new ones – the so-called ‘loyalty penalty’.
The new regulation, more commonly known as General Insurance Pricing Practices (GIPP), was introduced by the Financial Conduct Authority regulator.
The downside to this new rule is that whilst it restricts premiums, it leaves insures free to hike prices as they see fit.
GoCompare car insurance spokesperson Ryan Fulthorpe said: “GIPP was a huge shift for the insurance industry, ending the so-called ‘loyalty penalty’, but one year on, we have now seen the number of insurance companies charging increased admin fees has increased.
“While this could be due to inflation and other factors, there is a possibility that insurance companies are feeling the pinch from the GIPP rules and have had to look at other ways to recoup these costs.”
Motorists taking out cover with a new insurer paid 11 per cent extra during 2022 compared to 2021, according to the Association of British Insurers.
However, drivers renewing existing policies paid 7 per cent less, or £392 on average.
We spoke to our automatic driving instructor in London, Alex Folsom, who said, “When it comes to getting car insurance, it is best to shop around for the best policy. You can do this on price comparison sites and any policy you want to take out. It is important that you always read the policy in full, including the small print.”