Beware Insurance Small Print Extras

By Steve Hughes

Insurance costs are soaring due to a massive increase in personal injury claims and accidents involving uninsured drivers, with law- abiding motorists ultimately footing the bill.

Consumer watchdogs are warning drivers to beware of a new range of bolt-on extras for policies devised by insurance companies to make headline premiums appear lower.

Once the policies have been taken out, however, the full extent of the extra costs gradually comes to light but it is then too late to renege on year-long contracts.

Motorists can face charges for simple everyday events such as moving house, which can land them with a pounds 25 'administration' charge by their insurers.

Being lured into paying premiums monthly can now result in interest charges of up to 25% APR while taking a car abroad is now a stealth-tax lottery according to a driver's chosen insurance company.

According to motoring advice website KwikGuides.com some insurers will charge up to pounds 25 to make a change to the details on which a policy is based, on top of any additional premium that may be due for a new car or address.

Spokesman Stuart Coster said: "The AA charges this rate while Churchill charges pounds 21 but Norwich Union makes no administration charge for policy changes.

"With 7.5 million cars a year changing hands and one in 10 people moving home every year, charges for policy changes net insurers a substantial extra income."

The number of free days of full cover for taking a car to the continent included in policies also varies widely between insurers.

Churchill and Elephant include 90 days cover but Admiral and easyMoney charge for cover above Third Party.

Direct Line and eSure offer three days cover but taking a car on a two-week break to Europe would cost up to pounds 50 extra.

The AA charges 24.9% APR for paying monthly and Kwik Fit charges 16% for paying in instalments, says KwikGuides.

The site's guide to choosing car insurance includes a chart that compares premiums and the small-print of policies that could lead to extra costs later.

Among other policy features highlighted are whether a courtesy car is included and size of the compulsory excess.

A free courtesy car is becoming rarer as a standard feature, with insurers instead offering to 'guarantee' a courtesy car only in return for an additional fee when buying the policy. If drivers exercise their right to pick a repairer not approved by the insurer but which provides a free courtesy car, insurers often charge a higher excess.

Costs like compulsory excess motorists have to pay towards a claim can vary by as much as pounds 140 among different insurers, despite identical personal circumstances.

Mr Coster added: "Most of us will have a good idea whether we are likely to move house, change cars or take a car to Europe on holiday in the year ahead.

"Considering likely extra charges when buying and factoring them into the quote will ensure the true annual cost of policies can be compared. Simply aiming for the lowest quote is often not enough to guarantee getting the best deal."

(c) 2007 The Journal - Newcastle-upon-Tyne. Provided by ProQuest Information and Learning. All rights Reserved.