Home insurance by direct debit = credit agreement?

michaels

I took out my home insurance and topcashback offered an extra 25 cashback for paying by direct debit, the additional premium was 16 quid so it looked to be worth it.

Except now it appears I have been a fool as I have just received an email from a thrid party stating I have signed up to a credit agreement - ie I am not paying direct debit to the incsuance co but instead have borrowed the mooney to pay the premium.

This may be common knowledge to everyone but it wan't clearly enough flagged in the buying process for me to twig and so I have no doubt had a credit search and a new credit account on my file for a whole measly £9 (whereas I wouldn't normally do one for less than £100 profit). It was only 150 quid, hardly an amount someone would want to take a loan out for....

kingstreet

Premium funders don't normally do credit checks and don't normally register the account with a CRA, so it won't appear on your credit files.

InsideInsurance

Very little insurance is available monthly. If you want to pay by installments you get a loan which you pay back monthly. The bigger players normally finance this themselves as they can afford to but the smaller ones use external credit providers as they dont want the cashflow issues it causes.

As above, the insurer/ broker will have told you through the quote process if a credit check was going to be done, if they didnt then one wont have been done. Exceptionally few of these get reported to the CRAs

dunstonh

When you pay on monthly premiums, you are effectively borrowing the money to pay the annual premium. In the past, this was informal but nowadays, it is far more formal and you will receive a credit agreement for those that use that method.

As KS says above, it wont normally appear on your credit file unless you default or the amount is above their floor limit.

michaels

Thanks all for the info - still not worth the hassle for an extra 9 quid net of cashback though.....