Over half of UK drivers are overpaying for their insurance by signing up to monthly instalments rather than making a single annual payment, an exclusive auto express investigation has revealed.
Comparing premiums from various insurers, auto express found motorists who opt to pay for their policy on a monthly basis are charged 10 per cent more on average for the same cover, because insurers charge up to 19 per cent interest on monthly fees.
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Comparison site Gocompare.com claims 52 per cent of motorists opt to buy policies with payments split over 12 months. buyers choosing even the cheapest policies can end up spending £50 more when paying this way, while those who select pricier premiums that bring perks like breakdown cover and courtesy automobile options were found to pay hundreds more over 12 months.
The findings come after the association of British Insurers (ABI) said motor premiums have reached record high levels, with an average comprehensive policy costing £462. A spokeswoman for the ABI explained: “Customers paying for their automobile insurance in monthly instalments are effectively taking out a car loan for the cost of the cover and paying it back over 12 months, which means they incur interest and generally pay a higher total bill.”