Car insurance: add-ons, fees and charges

Even if you've shopped around, the price you're quoted for car insurance might not be the end of the story because of additional fees.

Some will be included in the quote, such as interest charged if you pay monthly. But others aren't included, such as fees if you cancel your policy.

Then there are fees for extra policy 'add-ons' you can choose to pay for, such as key and breakdown cover.

Here we reveal the insurers with the lowest and highest admin fees, and the add-ons you might be offered.

Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of an insurer before committing to any financial products.

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The insurers with the highest and lowest car insurance fees

We've given insurers a 'fee score' – the higher that score, the better, as a high fee score means low or no fees.

What car insurance fees do I pay?

Interest for paying monthly

Paying monthly for your car insurance may seem like a good way to spread the cost, but it can prove very expensive.

Making monthly payments means taking out a high-interest loan from your provider – sometimes with APRs of more than 30%.

Another option is to pay annually using a 0% interest credit card, then pay off your balance over several months.

Cancellation and cooling-off cancellation fees

If you decide you no longer want your policy, even within the 14-day cooling-off period, your insurer may charge you a fee.

Under the law, the fee has to be 'reasonable', but can still vary greatly between providers. With one in 10 policies we examined, you'll be charged £60 or more if you can cancel in the first year after the cooling-off period. Yet, with two policies we reviewed, you can cancel for free.

Adjustment fees

Having to change your policy is likely to cost you. Amendments can range from changing the name on your policy (if you get married, for instance) to adding a second driver. 

Fees of £20-£30 are common, although they won't always be charged. For example, some insurers waive a fee if you've made the amendment online.

Renewal fees

In our last survey, just under a third of car insurance policies we looked at charged renewal fees, with some providers charging as much as £50 each year for continuing your cover. 

Types of car insurance add-on

Enhanced courtesy-car cover

Insurers will usually offer a courtesy car during a claim while your vehicle is in the garage for repairs.

However, if you depend heavily on your vehicle, make sure you pay attention to the details so you know exactly what your insurer is offering.

Many will differ on whether the replacement car will actually resemble your own (in terms of size and make), or even if its availability can be guaranteed.

When we analysed the policies of best and worst car insurers, 30% would provide a temporary replacement vehicle, as standard, if yours was stolen or written off.

In most cases, you can pay extra to enhance your replacement-car cover beyond the insurer's bare minimum.

• Cover limit: 14 to 28 days

Legal expenses insurance

Commonly sold alongside car and home insurance policies, legal expenses insurance (LEI) covers the cost of pursuing legal action to reclaim expenses that aren't covered under your main insurance.

With a car policy, for instance, this might come in handy if you're suing for compensation for property damage or injury after a car accident.

Most car LEI policies provide £100,000 of cover. It's important to bear in mind, though, that having LEI isn't as simple as having straightforward access to a pot of cash.

Claims won't be accepted if the insurer doesn't believe you have a reasonable chance of succeeding with your legal action. It will typically have limits on the rates that are payable to solicitors, and you may not be able to pick your own lawyer.

Legal insurance isn't the same as liability cover, which is generally included in standard policies. Liability cover is for damages for which you're liable.

• Cover limit: £50,000 to £100,000

Breakdown cover

Car insurance pays out if your car is damaged in an accident, but you're on your own if it simply stutters to a halt.

Most car insurers offer breakdown cover as an added extra. There's typically a wide selection of cover levels to choose from, making for a vast range of prices.

It's possible to buy breakdown cover separately, potentially at a lower cost. Find out how much you could save with one of our Which? Recommended Providers for breakdown cover.

Personal accident cover

Personal accident cover pays out if you're killed or seriously injured in a motor accident. All but one of the policies we analysed provide some level of this cover as standard, but cover levels can vary by tens of thousands of pounds depending on the provider and level of cover you choose.

Standard levels of cover range between £1,000 and £10,000, but cover can be enhanced to as much as £150,000.

Personal accident cover is often more complex than the maximum payout limit, though. Different benefit limits will typically apply to different types of injury (for instance, to different parts of the body).

Some policies will also pay out for for daily expenses if you're hospitalised following an accident.

• Cover limit: £1,000 to £150,000

Key cover

Key insurance helps to pay for a replacement if your keys go missing. 

The cover provided will also pay for replacement locks. Some providers will also offer 24-hour assistance. Benefit limits for key insurance tend to range from £100 to £2,500.

Theoretically, you'd be able to make a claim on most car insurance policies to replace your car keys or locks. However, this would potentially reduce your no-claims discount and therefore impact the following year's premium.

• Cover limit: £100 to £2,500

Which add-ons do I need?

Add-ons are highly profitable for insurers. And while each type has its benefits, none are a must for all customers. 

For example, enhanced courtesy-car cover could be crucial if you need to stay mobile, but would be less important if you have access to more than one car.

With personal accident cover, you might consider alternative insurance options, such as life insurance, critical illness cover or income protection, to cover you or your family for financial loss if you're killed or severely injured.

An important thing to check when assessing a car insurance add-on is that you don't already own it. For example, breakdown cover can sometimes come as part of a packaged bank account. 

How we analyse insurers' fees

Our fee score is our assessment of how reasonable different providers' fees and charges are.

We look at nine fees,  including the interest you'd be charged if you pay in monthly instalments, administrative fees for setting up the policy and what you'd need to pay to leave if you cancelled your policy before renewal.

Initially, we score each fee out of five, with the lowest fees receiving the highest scores. The fee score shows how well the policy did across all rated fee areas. Products with higher fee scores charge generally lower fees. 

APRs and renewal fees – which are likely to have the most pronounced or widespread effect on policy costs – are weighted so as to have more of an impact in the fee score than other fees (such as duplicate document charges).

Got more questions on car insurance? See our guides:

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• Electric car insurance explained
• How black box car insurance works
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