Admiral insurance could charge you £145 more just for paying monthly
Car insurance is compulsory, so once a year you have to find the spare cash to insure your car for another year (making sure you shop around at that time to find the best deal). In recent times, of course, it has been possible to pay for your insurance monthly, convenient for people paid monthly, but it seems that some insurers are trying to cream extra profits out of poor instalments payers- by charging extra on top of additional interest charges.
In an ideal world, insurance companies would allow you to spread the cost of your annual insurance over the months you use it free of charge. Unfortunately these are insurance companies we are talking about, so there is generally an interest charge for spreading the payments- although it's always worth checking what this is, as the rates can vary wildly between providers. However, a new Which!!! investigation has discovered that, in addition to interest charges, some insurers are charging monthly customers more just because they can.
The offending insurers are the Admiral group of companies, which includes the Elephant and Diamond brands, who are using this double-dip approach to effectively charge monthly customers twice for paying monthly. By comparing the annualised monthly and the one-off annual insurance cost on a number of vehicles, Which!!! found that the difference could be as much as £145.
The examples found by Which!!! include a quote with Elephant.co.uk for a 25-year-old Toyota driver, where the annual premium was £594.66. Without including a charge for interest, however, when selecting a pay monthly premium, the cost rose to £642.36. Interest was then added on top of the inflated premium, bringing the full cost over a year to £702.35. That's £108 more for paying monthly.
Of course, the insurer would never admit to charging people more for anything. Instead what they are actually doing is offering single-payment customers a 'discount' from the standard price. Of course they are. Which!!! found that these 'discounts' varied considerably depending on the scenario and insurer. For the Toyota driver above they ranged from £44.52 to £47.70, while for a 30-year-old Audi owner they were as little as £2.12 with Diamond and Elephant, and £8.48 with Admiral. In the worst case, Which!!! found a difference between one-off and monthly premiums of £145.22 on a quote for a Ford Focus Zetec, insured with Admiral.
Which!!! say they “don't think [insurers] should be attempting to make a second profit on customers" who don't have the funds, or who simply choose to pay their premiums monthly. We agree, although capitalist society can't blame the insurance companies for trying. What's clear is that if you do check quotes at renewal, you are likely to find a cheaper monthly premium by selecting an insurer who doesn't bump up the prices.
Admiral declined to comment owing to “commercial sensitivity."