Paying for car insurance by direct debit may push up premiums
Written on August 24, 2010 – 4:07 am | by Hunter Appel
Drivers who spread the cost of their car insurance and pay by direct debit could end up paying more than they bargained for because not all car insurance providers are clear about the costs of paying monthly.
According to financial research company Defaqto, which has released a report addressing the challenges currently facing the motor insurance sector, car insurance providers should clarify the cost of paying by direct debit.
Monthly instalments provide motorists with a way of budgeting for their car insurance instead of having to pay the premium in its entirety. Some insurers do not charge extra for this, however others do, with an average added cost of between eight and 11 per cent on top of the original premium.
Even though paying by direct debit pushes up premiums by a significant margin, Defaqto’s research found that eight per cent of the car insurance policies on the market do not state how much it costs for the privilege. The report called ‘The motor insurance industry; at a crossroads’ also indicates that this extra cost is in addition to other charges, including fees for adjusting a policy, duplicate documents, cancellation and renewal.
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Tags: Car Insurance, Debit, Direct Debit