Will You Pay to Adjust Car Insurance Policy?

The Government’s car scrap page scheme was meant to provide a significant boost to the automotive industry. It offers drivers with cars that are at least 10 years old a £2,000 incentive to buy a new car in exchange for their existing vehicle. The Society of Manufacturers and Motor Traders has labeled the scheme a success, prompting significant sales in an otherwise ailing motor industry.

However, while the idea of the scrap page scheme is to save drivers money, it has also forced some motorists to make unexpected expenses – in particular a fee to adjust their car insurance policies.

What are car insurance adjustment fees?

If you need to make a change to your car insurance policy during the term of the policy, several insurers will charge you a fee for the service, particularly if it involves the transfer of an existing policy to a new vehicle. The average mid-term adjustment fee stands at £19.40 although some providers do charge significantly more for this service.

For example, the AA, Esure, More Than and Sheila’s Wheels all charge £25 for mid-term adjustments. What’s more is that both Esure and Sheila’s Wheels have increased their fees by 43 per cent in the last year alone suggesting that some providers are cashing in by penalising motorists for any changes to a policy prompted by the change of vehicles. These prices however, are dwarfed by the highest mid-term adjustment fee in the market which stands at £35 from Provident Insurance.

The situation gets even more complicated if you wish to cancel a policy and move to another car insurance provider. In this case, fees can be as high as £75 as charged by the AA, while the likes of Churchill and Prudential both place an ‘unlimited’ cancellation fee on their policies.

How can drivers avoid these fees?

It’s a catch 22 situation for most of the UK’s motorists who want to capitalise on new vehicles being comparatively cheap but know they will face high charges from their car insurance company if they make adjustments.

Clearly most new car savings will outweigh the money spent on car insurance adjustments meaning it’s hardly worth sacrificing a great new car offer just to avoid a car insurance fee. However, it is worthwhile to plan ahead for these penalties.

If you know you’re going to change your vehicle in the near future when your policy is up for renewal then examine the fees charged by your existing insurer – they will usually be hidden away in the terms and conditions. If they appear extortionate then shop around for a car insurance provider that will not charge such extensive fees – there are still a number of insurers that do not charge for mid-term adjustments. Chances are that while you’re shopping around you may be able to find a cheaper car insurance policy anyway, which should also help you to save money in the short term.

In terms of cancelling a car insurance policy, the fee is meant to be off-putting so you stick with your insurer. However, if you find a policy that is cheaper elsewhere it may be possible to switch, pay the fee and still save money. If not, then wait until your renewal and then change.

Things to remember with car insurance for a new car

Anyone looking for car insurance for a new car should shop around with a comparison website to compare quotes from as many providers as they can. The leading comparison websites have more than 100 insurers in their listings giving you a near complete overview of the market. This way you can see how much you could potentially save by moving to a different provider.

Think about how the car you choose will affect your premiums too. Each new car is placed into an insurance group from 1-20 (this will rise to 1-50 in December). The lower the car insurance group, the lower your premiums will be. Generally, smaller cars with conventional engines and parts fit into the lowest insurance groups. So try and choose a new car with few modifications but good security features.

If you decide to stick with your existing insurer for the time being there are still ways to save. For example if you park your car in a garage at night, increase your new car’s security, take an advanced driving course or agree to a mileage limit you could save. Further discounts are available by building a no-claims bonus or agreeing to increase your voluntary excess.

Then when your car insurance is up for renewal, shop around for a cheaper deal.