MSE News: Insurers failing to give clear information on payment options

rs65

gadgetmind wrote: »

I've run the sums for every insurance renewal (and TV license BTW) and have always decided to make a one off payment.

Same here - unless its interest free. I suspect the majority pay monthly but I've never seen stats on this.

gadgetmind

Interest free aka "you're paying interest but we're hiding it".

Insurance margins are wafer thin so most of their profit comes from getting up front payments but on any claims being further down the line.

Consumerist

gadgetmind wrote: »

Interest free aka "you're paying interest but we're hiding it". . .

Agreed. See also "0% finance".

Pincher

The important part is that you cannot cancel the policy part way and get a refund.


If you pay in one lump sum in the beginning, no credit agreement has been drawn up, and the insurer can give you a pro rata refund, less some admin fee.


Idiots want the monthly option, thinking that they can sell the car in say month 9, then cancel the direct debit, and walk away from paying any more.


What happens is the premium was £500, but a middleman signs a loan agreement for £600 with the policy holder. The insurer gets £500, just like a single lump sum premium. You have an obligation to pay £50 a month for 12 months to a loan company, and the loan agreement has nothing to do with your insurance. The insurance company may be willing to give you a partial refund on the £500, but you have to complete the 12 payments any way.


If you want to spread the payment, you can get a 0% purchase credit card, pay the £500 premium, then pay off the balance over whatever the credit card deal is.