Administration Charges
In addition to the premium cost, the overall cost of your car insurance may be increased by administration charges. Typically, you will have to pay fees for special services that include:
- Policy Amendment Fee – this charge, typically anywhere up to £26, may be levied by your insurer for any changes (see Amendments) to your policy. These include: change of address; declaring a driving conviction, accidents and claims. Some insurers distinguish between minor and major changes, such as change of address versus making a claim, and will typically charge you only for major changes. You will not usually be charged for changes that relate to payment, for instance, you will not usually be charged if you need to change the direct debit payment date, or amend debit/credit card details.
- Policy Cancellation Fee – this fee, which can be an unlimited percentage of your outstanding premium depending on your provider, may be charged at any point if you decide to cancel your policy before its expiration date. This charge varies widely between insurers: if you feel your circumstances may change and you would need to cancel your policy, you should choosing an insurer who does not charge for early cancellation.
As of January 2008, administration charges and fees on car insurance policies are not regulated: in essence, insurers can charge anything they wish for the special 'services' above. The Financial Services Authority (FSA) previously included 'Excessive Charges to Retail Customers' within the Insurance Code of Business (ICOB). However, in January 2008, this document became the Insurance Code of Business Sourcebook (ICOBS) and the 'Excessive Charges to Retail Customers' section was removed.
It is worth remembering however, that despite relatively expensive fees you should always tell your insurer of a change in circumstances: failing to do so could invalidate your insurance. In addition, if your circumstances change favourably, that is, become less risky, perhaps because you have moved to a safer neighbourhood, you may be entitled to a reduction of your premium.
