Yahoo Finance Car insurance customers paying monthly risk £300 penalty
Drivers paying their insurance on a monthly basis are being charged £300 more than those who pay annually, according to new research.
In November 2019, customers paying monthly were charged £673 on average for a year’s cover, while those paying upfront paid £456, a difference of £217, consumer body Which? said.
However, in November 2022 the difference increased to £302, a rise of 39%. Monthly payers paid £757.60 compared to £455.49 for annual payers.
The data from comparison site GoCompare showed that, as of November 2022, almost half (46%) of car insurance customers opted to pay in monthly instalments — with the other half paying in full upfront.
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While not every pay monthly customer is paying more, the more severe price increases could be falling on the drivers least able to afford them, the consumer body warned.
According to GoCompare, younger customers often opt for monthly payments and are usually deemed a greater risk by insurers, which could increase the premium.
Low-income households are also more likely to pay monthly, and to face higher premiums, according to the Financial Conduct Authority (FCA).
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.
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“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.”
Watch: Price of car insurance up 20% — as drivers told how to bring cost down
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