Car insurance admin charges
We explain what car insurance admin charges exist, when you might need to pay them and how to keep them to a minimum.
Have you moved house, changed career or started using your car to commute in the last few months? If so, have you let your car insurer know? If you haven’t, we recommend doing so as soon as possible, as you risk invalidating your policy if you don’t. The bad news is that such changes – or cancelling your policy early – can result in annoying administrative fees. While you may not be able to avoid such fees completely, there are ways to reduce admin charges – or challenge them if you think they’re unfair. Here’s the lowdown on car insurance admin charges.
What are car insurance admin charges?
Car insurance admin charges are fees that you may need to pay to your car insurer above and beyond your insurance premium. They most often apply when a car insurer has to cancel or make a change to your policy partway through an insurance term, though some insurers charge for other administrative tasks too. Most car insurance admin fees are fixed amounts, which can vary significantly depending on the insurer and the type of charge.
Why do car insurers charge admin fees?
Most insurers charge admin fees to cover the administrative cost of someone making changes to their policy. Every time someone updates their policy details, for example, the insurer may have to re-run their underwriting criteria to see if the change has an effect on the customer’s risk and the premiums they pay.
This can have a cost to insurers. If they didn’t charge admin fees, they might instead have to cover this cost in other ways – for example by spreading the cost across the premiums paid by all policyholders, regardless of whether they make changes.
While admin fees are allowed, they should be “reasonable” and reflect the actual cost to the insurer.
What are the different types of car insurance admin fees?
The table below outlines the most common types of car insurance admin fees and when they apply. Bear in mind that admin fees will apply in addition to any changes to your underlying premium. For example, if you move to an address that the insurer regards as higher risk than where you lived before, your annual premium may increase.
|Admin charge||When it may apply|
|Adjustment fee||When you make a change to your policy, such as changing your name after getting married, moving address, changing profession, increasing your annual mileage or adding a named driver.|
|Cancellation fee||If you cancel your policy partway through a term. The level of the fee will depend on whether you cancel within the cooling-off period.|
|Duplicate document fee||If you request an additional, usually paper, copy of your policy documents. This is rarely applied in practice these days, partly because many insurers send policy documents in digital format.|
|Pay-monthly fee||An interest charge applied if you pay your premiums in monthly instalments rather than as an upfront, annual payment.|
|Renewal fee||May apply when you renew your policy. Renewal fees are pretty rare, but some brokers (that offer insurance from a panel of insurers) may apply them.|
Do all car insurers charge the same amount for admin fees?
No. Admin fees can vary quite significantly between car insurers, and a small number of insurers charge few or no admin fees at all.
If you know before taking out a policy that you are likely to need to make changes – if you plan to get married or move house, for example – you might want to take insurers’ admin charges into account when you choose your policy.
How much does it cost to make changes to my car insurance policy?
Changes you might want (or need) to make to your car insurance policy partway through a term include the following:
- Changing your name – for example after getting married (or divorced)
- Changing your contact details
- Changing your car’s registered address after moving house
- Changing profession after a career shift
- Starting to use your car for business purposes
- Increasing or decreasing your annual mileage
- Adding a named driver.
We checked the cost of making these kinds of changes with 5 of the UK’s biggest car insurers – the table below shows the different approaches taken by different companies. It’s worth noting that some insurers charge different amounts depending on the specific change you want to make. For example, Hastings Direct doesn’t charge anything to change your name or marital status but would charge for a change of home address.
Bear in mind that, in some cases, adjustments you make can also affect your underlying premium, so even if there’s no admin fee, you may need to pay for a premium increase. Don’t be tempted to withhold relevant information from your insurer to avoid this, though. Doing so could invalidate your policy.
Leading car insurer adjustment charges
|Insurer||Adjustment fee – online||Adjustment fee – by phone|
Correct as of 26/09/2022. For changes made by logging into Admiral online account. Changes made by web chat incur a £55 charge.*
£0 for changes to name or marital status, email address, phone number or mileage. £20 for other changes.**
How much does it cost to cancel my car insurance policy?
If you no longer need your car insurance policy – for example if you sell your car – you’re entitled to cancel it.
However, cancelling your car insurance policy before it’s due to renew tends to incur one of the biggest admin fees, especially if you do so after your 14-day cooling-off period. Below, we show cancellation charges applied by 5 leading UK insurers. While a number of insurers don’t charge a cancellation fee during cooling-off periods, the vast majority apply a fee to cancel after this.
Regardless of when you cancel, you will usually receive a pro-rata refund of your policy premiums, less a charge for the number of days for which you’ve already been covered. However, you are unlikely to receive any refund at all if you’ve made a claim during that period – but you may still have to pay a cancellation fee.
Bear in mind that most no-claims bonuses only accrue based on full years of cover, so you may lose that year’s no-claims bonus if you cancel your policy mid-term. Depending on the level of the charges, and how long you have left on the policy, you may be better off letting it run its course (though make sure it doesn’t auto-renew). Alternatively, you could ask about transferring it to a new car (if you have one).
Leading car insurer cancellation charges
|Insurer||Cancellation within 14 days||Cancellation after 14 days|
Correct as of 26/09/2022
What is a car insurance cooling-off period?
A car insurance cooling-off period refers to the 14 days after your cover starts or you receive your policy documents (whichever is later). During this period, you are allowed to cancel your policy for any reason and receive a refund of the premiums. Your insurer will usually deduct a pro-rata amount for any days during which your cover was in place.
Insurers may still charge an admin fee to cover their costs. However, according to financial analysis firm Defaqto, around half of insurers don’t charge cancellation fees within the cooling-off period. And, where there are cancellation fees, they’re typically lower than if you cancel after the cooling-off period.
Where can I find out what a car insurer’s admin fees are?
Car insurers should make their admin charges clear to potential customers when they take out a quote, so read terms and conditions thoroughly before hitting the buy button.
In most cases, you should be able to find a summary of charges before getting a quote by searching the insurer’s website. The details can sometimes take a bit of rummaging to wheedle out though. If you know you’re going to need to make changes and can’t easily find the specific details of relevant charges, contact the insurer directly.
If you already have cover, the charges should be clearly outlined in your policy documents.
Can I reduce admin charges for car insurance?
If you think there’s a good chance you’ll need to make changes that could incur admin charges, there are a couple of simple ways that could help keep the amount you’ll pay to a minimum:
- Opt for an insurer that charges low or no admin fees. As our tables above show, some providers don’t charge admin fees to make policy adjustments or to cancel within your cooling-off period. You’ll need to weigh this up against the cost of insurance premiums, though. The best approach might be to shortlist a few insurers that offer the best combination of cover and headline price and then check their admin fees.
- Make changes online rather than by phone. Many insurers charge lower adjustment fees if you make them online, for example by logging into your car insurance account. Some will even waive charges completely.
How to challenge car insurance admin charges
It’s not always possible to predict the changes that you might need to make to your car insurance. If you need to make a change and discover late in the day that your insurer’s admin charges are higher than you expect, it could be worth challenging them using the following steps.
- Try negotiating with your insurer. If you’re a loyal customer, it might be willing to reduce the fee level or waive it completely if it means they’re more likely to retain your custom.
- Put your complaint in writing. You may be able to argue that the fees are unfair if you don’t think they reflect the true cost of administration. If you know that most other insurers charge lower fees, this could reinforce your point. Another argument in your favour is if the fees were not clearly outlined in the policy documentation you were given at the outset.
- If steps 1 and 2 don’t work, complain to the Financial Ombudsman Service (FOS). You can escalate your concerns to the FOS 8 weeks after making your initial complaint. There have been cases in which the FOS has ruled admin charges to be unfair due to them having been poorly explained to the policyholder or not clearly outlined in policy documents.
Nobody likes to be hit with unexpected admin fees as a result of factors that are often outside of their control, which is why it’s important that car insurers make all their admin fees clear from the outset. Use this guide to get a good grasp of the kinds of fees you might encounter, and check your chosen provider’s small print before you take out cover – especially if you anticipate needing to make changes to your policy. If your insurer applies an admin fee and you think it’s too high, or it wasn’t clearly explained in your policy documents, you may be able to challenge it.
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