Let us looked into these potential fees through a survey of UK car insurance companies
NoClaimsDiscount.co.uk questioned several car insurance companies about this administration fee, and what exactly the policyholder was being charged for. Although six insurance companies were contacted, only one responded and that was Swiftcover.com. Craig Staniland, Underwriting Director for Swiftcover, stated: “Swiftcover.com does charge £25 to customers who cancel their policies during the first 14 days. There are two reasons for this nominal fee: to cover our administration costs and to also reduce the number of people who enter into a motor insurance contract and cancel at the first opportunity once they receive their Certificate of Insurance.”
NoClaimsDiscount.co.uk pointed out in their research that most insurance companies do mention an administrative fee in policy documents. The RAC, Sheila’s Wheels, Sainsbury’s, Churchill, Esure, Co-op and Privilege all use the following terminology in their paperwork to advise of an impending charge: “Less an administration fee to take account of our costs in providing your policy. The fees are detailed in your Schedule.” However, frequently customers don’t find out about the fee until they are charged this sum. Additionally, most companies don’t indicate the amount of the administrative fee.
As it turns out, car insurance companies assess a wide range of fees to customers who cancel their policies mid-term. Often the insurance companies label this charge an “administrative fee.” This fee can range anywhere from £25 to £55. Some companies will not tell customers the exact fee until the charge is processed. Though its research, NoClaimsDiscount.co.uk tried to confirm actual cancellation costs as examples e.g: Elephant.co.uk charges £47.50, MORE TH>N charges £55.00, Barclays Insurance charges £27.50, Swift Cover and the AA charge £25, LV charges £35.00 and Saga will only charge you if the administration cost incurred exceeds £5.00, although they don’t offer an upper ceiling limit.