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What car insurance charges and fees do I have to pay?


Owe Carter



What car insurance charges and fees do I have to pay?

When taking out an annual car insurance policy, or making changes to it, you may well incur fees or charges. The most common ones are as follows…

What are adjustment fees?

Most insurance policies are annual contracts, and are renewed on the same date each year – assuming you don’t cancel or switch.

This makes them inflexible, to a certain degree. Obviously life happens, and you’re able to make changes to your policy – but you may well have to pay for the privilege.

Changing your address, your car or your name are all things you should tell your insurance provider about. And they’ll almost certainly charge you an admin fee accordingly. This tends to be in the region of £30, but could be more.

It’s worth noting that some changes may also change the price of your policy, in addition to getting slapped with a fee. Both changing your address and your car are likely to change the price of your policy. This is because your insurer may view that a different car or postcode may pose a higher or lower risk of having to make a claim.

Essentially, anything that changes the risk of being involved in an incident will change the price of your policy.

What is a cancellation fee?

This does what it says on the tin. As most insurance policies are annual contracts, you’re likely to be charged a fee if you cancel before the year’s out. This tends to be between £40 and £60.

There are a few providers who don’t charge cancellation fees – but these are the exception rather than the rule.

It’s common practice for insurance policies to have 14-day ‘cooling-off’ periods when you first take them out. This suggests that you can cancel for free during that time. But watch out for this… Cancelling within a cooling-off period isn’t always free. The terms and conditions will vary between providers, so be sure to read the small print before signing up. Some providers charge as much as £30 if you cancel within that time(1).

Do I have to pay interest?

When you apply for an annual car insurance policy, there are usually options when it comes to payment. Most commonly, you’ll be asked to pay the whole lot (known as the premium) upfront, or be given the option to pay monthly – usually by Direct Debit.

While paying monthly is a good way of spreading the cost, insurance providers usually charge interest. This is the monthly APR, and it stacks up over the course of the year.

According to research by Compare the Market, the average car insurance policy between January and April 2022 cost £752 if paid monthly, or £693 if paid in one whack. That’s nearly £60 in interest payments alone. And if you consider that the average 18-year-old paid £1,453 in that time, the amount of interest collected will be much higher.

When you receive your prices, you should be told how much each type of payment will cost overall. If you can afford to pay the whole lot in one go, it’s likely to be much more cost-effective.

Are there any other fees?

It’s possible to be charged renewal fees, but this doesn’t happen often. Sometimes brokers charge fees to renew, which is a pretty good reason to shop around for a new policy.

So Driverly doesn’t charge any fees?

Nope. Nada. Zip. Diddly. No adjustment fees, no cancellation fees… Nothing.

How is this possible?

While paying an annual premium is the norm, we have a subscription-based service. This is becoming increasingly popular, as it’s more flexible than the traditional model.

And, despite making monthly payments, our customers aren’t charged interest. This is because we’re not spreading the cost of an annual payment, so there’s no need to facilitate this with a loan. Rather, we use dynamic pricing, so you’re only paying for the month in question – although the cost may go up or down, depending on how safely (or otherwise) you drive.

Overall, we think this way of charging customers is preferable, as it’s more transparent than taking out an annual policy. When considering which annual policy to take out, you need to take all potential charges and fees into consideration, which vary from provider to provider. And sometimes you may not be able to predict what changes might occur during the term of your policy.

Want to know more about how our insurance works? Get the lowdown here:


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