Customers who make changes mid-policy, such as adding a named driver, changing your phone number or updating your home address, are being hit with extra costs called "adjustment fees" – and they're on the rise.
The number of insurers charging these kind of fees is up 73 per cent from 68 per cent in 2015, according to new analysis put together by financial data company Defaqto for LoveMONEY.
The amount insurers charge has also shot up to almost £50 compared to typically £20 four years ago.
Motorist are also being slapped with another fee just to renew their insurance, with the number of policies imposing the payment rising to 30 per cent, up from just eight per cent four years ago.
Typically, insurers charge between £20 and £29 for this service but around five per cent of them charge £50 or more.
The fees are "hidden" because they're often buried in the policy small print and not obvious from the get go.
The analysis blames a competitive market which has lead to insurers slashing headline prices to offer value to customers.
Now, they're charging hidden fees on policies to claw back some of the income.
Mike Powell, a consultant at Defaqto, said: "Other changes which affect the risk could see an increase in the premium and also an administration fee being added, so for example, a change in occupation, informing the insurer of a recent motoring conviction or when a young driver passes their test.
"If additional costs are payable, question your provider and ask it to explain how they have calculated the additional cost."
How to save on car insurance
- Buy 21 days in advance – Purchasing a policy three weeks in advance can cut your bill in half. Buy 30 days in advance and it could cost you hundreds because there aren't as many policies out there. Taking out a policy too late and insurers will deem you a higher risk and whack up your premium.
- Never accept a renewal quote – Your policy could double overnight if you're not careful. Make sure you put a reminder in your phone of when it's up and shop around for a better deal.
- Check more than one comparison site – These sites offer different deals so it's best to look at more than one site at the 21 day mark to see what they can offer.
- Check Direct Line and Aviva separately – Two of the biggest companies aren't on comparison sites so you'll need to check them too to see if they can offer you a better deal.
- Don't wait for a renewal – If you find a better deal elsewhere, you can cancel your existing policy and get a refund for the rest of the year. There will be a fee though – usually £50 – so take that into consideration when you look at how much you can save.
But drivers shouldn't be tempted to hide changes from their insurers in order to dodge the arrangement fees as it could invalidate their policy.
You can avoid renewal fees by shopping around for a different policy.
Some insurers, like Direct Line, Budget and Aviva don't charge adjustment fees either which might be something to take into account before taking on a new deal.
If you've been charged admin fees that you weren't expecting and it wasn't made clear from the moment you took out the policy then you challenge your insurer.
It is not obliged to refund you the cost but if you feel it is being unreasonable you can take your case to the Financial Ombudsman.
A spokesperson for the Association of British Insurers, which represents the industry told The Sun: "Motor insurance is an incredibly competitive market.
"It’s always a good idea to shop around to find the best cover that suits your needs – and don’t just buy on price, make sure the policy gives you the cover you would need if you did come to make a claim."
Looking to drive down the cost of your insurance? You can actually slash your car insurance bill by up to £140 a year by tweaking your job title.
Taking out fully comprehensive car insurance in February are paying an average of £85 LESS than those who renew in December.
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