Car insurance hidden fees: 10 tips to avoid being caught out

A new study has found almost 1-in-5 British drivers are being hit by hidden car insurance fees - with younger motorists worst affected.

Hidden car insurance fees

Millions of British drivers are being caught out by sneaky bills, with those hit shelling out an average of £123.40 every year. For those impacted between the ages of 18 and 24, the average figure is an eye-watering £334.40.

The study of 1,500 motorists, carried out by Perspectus Global on behalf of Cuvva this month, sheds more light on just how unfriendly and greedy the car insurance industry can be - something we want to change.

From cancellation fees to APRs

Cuvva’s study found 18% of British drivers are being hit by hidden car insurance fees. The most common are:

Adjustment fees: These sneaky fees are added to the bills of drivers who make changes to their policies midway through their contract. Of those drivers who said they had been hit by hidden fees, 36% said they had to pay adjustment fees.

Cancellation fees: Almost one-third (30%) of impacted drivers said they were hit by additional fees when trying to cancel their insurance. Cuvva never charges drivers for wanting to end their policy.

Add-ons: Motorists across the country are paying extra for everything from key cover to ‘enhanced courtesy car cover’ - it all adds up, and it can be incredibly frustrating. Our study found 28% of drivers who paid hidden fees reported being hit by add-on fees.

APRs: Your APR (annual percentage rate) is essentially the interest you pay while spreading insurance bills out over a year. Some companies charge eye-watering interest. Almost one-quarter (24%) of those who said they had faced hidden fees were hit by APRs.

Top 10 tips to avoid being hit

Our study shows, once again, how broken the car insurance industry really is. We’re determined to fix that. To help you avoid getting caught out, we’ve put together our 10 top tips. It’s time to put the customer first.

1. Always read the fine print and terms of business agreement before taking out an insurance policy. This is where you’ll often find hidden fees.

2. Request a full breakdown of fees before accepting a quote or renewing a policy. Your insurer should share these with you.

3. Pay attention to the APR annual percentage rate if opting for annual cover paid in monthly installments. Some insurers charge up to 39% on top of the premium itself.

4. Ensure your personal and driving information is correct before purchasing a policy. If your details change, inform your insurer ASAP. You might be penalised or, worse, left uninsured if your information is incorrect or out-of-date.

5. Many insurers automatically renew your policy at the end of each year. Make sure you’re getting the best deal on your new premium and they’re not bumping up the price when you renew. From 2022 onwards, insurers will no longer be able to charge loyalty penalties, meaning their renewal prices will not be higher than if you were a new customer.

6. The cheapest policy on a comparison website might set you back in the long run, as you might find you’re only covered for the bare minimum - meaning lots of potential for hidden fees and not being fully covered when you need to make a claim.

7. Compare excess levels and cover levels, not just premiums.

8. Make sure you know what the excess is up front and that you're comfortable and able to pay it if you have to make a claim.

9. Look out for the typical hidden fees such as cancellation fees, mid-term adjustments, cooling off periods, black box installations and extra mileage fees.

10. Self-service via an insurance provider app may help you avoid certain fees (some insurers may charge an ‘Administration Charge’ fee to adjust if the policy is changed over the phone). However, if you do it yourself via their website or app, the charge is often waived.

Another way is possible

Freddy Macnamara, CEO at Cuvva said: “Average car insurance policies don’t suit modern-day consumers. Drivers want the flexibility to cancel a policy or make adjustments but in most cases, flexibility comes at a cost in the form of hidden fees.

“Cuvva is on a mission to simplify car insurance to better suit consumers' actual needs. Car insurance should be there when you need it and it shouldn’t be layered with unfair hidden fees, penalties and interest.”

Check out a little more about our mission here.

Get insurance

You need to be insured before you hit the road - and Cuvva's policies from 1 hour to 28 days might be able to help, with cover starting from just £11.90.

• Temporary car insurance for borrowing or lending a car in minutes.
• Learner driver cover for driving lessons, getting practice in with a supervisor, or taking the driving test.
• Drive away insurance for getting your new car home from the dealership.
• Temporary van insurance for moving home, dropping things to the recycling centre, or carrying a heavy load.

And it only takes a few minutes to get a quote.