Deception from car insurance firms is driving up motorist premiums, says Fairer Finance

Car insurance companies have continued to deceive motorists out of hundreds of pounds each year by cleverly burying hidden fees and charges into their policy small prints and intentionally failing to make these clear to them, according to research from prominent consumer group Fairer Finance.

The misconduct on the part of officials within the insurance industry has meant that thousands of people have paid inflated prices on their policies in the last year, after poor practice meant that motorists across the UK were coerced into signing up for policies that were unnecessarily expensive and came with a lack of both transparency and clarity.  

Fairer Finance concluded that malpractice from insurance providers is still endemic across the country and pointed out that a staggering 33% of them continue to set up pay-monthly policies for their policyholders, even when they have been directed to their company from a comparison site where they had already specified that their desire to pay on an annual basis.

This is significant because insurance providers often charge a lot more when payments are spread out over a year period, instead of being paid off for the entire year in a single lump sum. As such, premium holders who fail to ascertain whether their individual policy is paid on an annual basis, despite specifying so, have been unfairly asked to pay more than they should of in order to attain cover for their cars.

Alarmingly, a plethora of different insurance firms like AA and Allianz have carried on applying automatic add-ons to the insurance their customers are taking out without fully clarifying what they are, how they work and the amount they will cost.

For all who are unfamiliar with what add-ons are, they are simply additional insurance components which can be paid for on top of an individualís main policy to ensure that they attain more comprehensive cover than they already have. It is thought that certain sections of the industry actually generate over 33% of their overall profits from the consumer purchase of these add-ons.

The news marks the latest chapter in the ongoing battle between renegade parties in the insurance industry and regulators, with the Financial Conduct Authority (FCA) previously brandishing the entire ëadd-onsí market as poor value for consumer money. It estimated that consumers were currently overpaying more than £200 million each year by using these add-ons and signalled its intention to instigate a total ban on insurance companies from automatically applying these add-ons to peopleís policies.

James Daley, managing director of Fairer Finance, accused the AA of intentionally designing their customers add-on policies to be valid over a distinctly different period than their main insurance in order to bolster their profits.

“It runs out of sync with the car insurance policy so that they don’t come up for renewal at the same time,” he said.

“The AA also doesn’t even tell customers at the point of purchase how much the home emergency cover will cost when the six months are up.”

AA have since responded, with a spokesperson highlighting that the company is currently working on getting rid of the automatic emergency add-on.

“AA Home Emergency is a very good product that we think customers appreciate, but the AA is keen to be transparent,” he said.

“In any case, home emergency cover, under the banner of AA Home Membership, is a popular choice for customers if it is offered on its merits without the free six-month automatic opt-in.”

ëQuick, extra buckí

Fairer Financeís study also found that a staggering 75% of insurance firms are currently failing to fully elaborate on the various fees and charges they are applying on policies to their customers, with the majority allegedly choosing to hide them away in the small print of their clients policy documents.

Furthermore, the study found that over 33% of companies failed to even have them included within their customerís policy documents, instead directing their clientele to altogether different documents which contained them in buried manner as well. The problem has been substantiated by the fact that the average word count of consumers policy contracts has risen to 18,400 words from 18,000 in the last 6 months, whilst Fairer Finance arguing that only 2 of the countryís 44 major firms actually used clear English when describing fees and charges.

A spokesperson for the Association of British Insurers argued that the policy papers were a clear example of what insurance providers should be adhering to with their own sales and called on them to fully point out all aspects of the policy to their customers before asking them to sign up.

“That said, policy documents should be designed and written to make it as easy as possible for customers to understand the cover they have bought,” he said. “In many cases cover has widened in recent years and this may be reflected in the size of policy documents.”

Mr Daley argued that representatives of the insurance industry can still do a lot more than they currently are to make sure that transparency and clarity of hidden costs are made a lot clearer.

“Fees and charges are often hidden away and policy documents are generally far too long for customers to realistically tackle,” he said.

“In the long run, it’s in insurers’ interest to ensure that their clients understand what they’re buying. But too many insurers find it too hard to resist the opportunity to try to make a quick extra buck.”

The final assessment of different insurers will be available on Fairer Finances site at the end of this week, and will provide detailed information about client contentment and insurer performance for the consumer worldís benefit.

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