Home insurance companies can significantly bump up the cost of your policy using sneaky administration fees that make it harder to find the best deal.
As part of our campaign to stop sneaky fees and charges, we analysed the fees imposed by 36 major insurers and found that half charge an adjustment fee for making changes to your policy, such as updating your address. These fees ranged from £8.48 with Aviva to £25 with Castle Cover and Rias.
Of the six insurers that charge for a copy of a document, Endsleigh charges the most (£20), while Budget Insurance charges the least (£5).
Four insurers charge a fee if you pay for your insurance by credit card, which consumer rights regulations say must be no more than it costs the company to process that payment type. However, Admiral charges a flat rate of £5.95, which we think is unlikely to be reflective of its costs.
Find out more: Best and worst home insurance – the top home insurers overall
The best home insurance companies for fees
When assessed against a number of criteria, Barclays and Lloyds Banking Group came top of our table. They don’t charge any fees and also pay generous switching fees – an amount a provider pays towards any charges you face for switching to it before your current policy ends.
Endsleigh came bottom with a score of 43%, and Admiral followed closely with 44%.
We are calling on companies not to hide the full cost from customers, stop making hard to compare prices and stop stinging customers with rip off additional charges.
Find out more: Home insurance fees – see the full results
Home insurance charges not transparent
We also found it’s not always easy to check what fees you might be charged in advance. Most insurers include their fees in the policy documents on their websites or in a FAQs section, but Bradford & Bingley, Endsleigh, Nationwide, the Post Office and Prudential all required us to get a quote before setting out their fees.
We think simple things like providing a copy of a document could be done for free as part of good customer service. Add-on charges make it more difficult for consumers to compare prices so we want the Financial Conduct Authority to consider whether these fees are just a way of hiding the overall price and whether insurers should be allowed to charge them at all.
Which? executive director, Richard Lloyd, said: ‘Being hit with unexpected admin charges could mean your insurance actually ends up costing more than it would have done elsewhere.
‘Insurers must help people compare deals by being upfront about their additional fees and we want the regulator to consider whether these fees are really justified.’
Find out more: Sneaky fees and charges campaign – pledge your support
How to avoid home insurance charges
Here are our top tips for avoiding admin fees:
- Consider using a 0% credit card – if you can’t afford to pay annually for your cover consider using a 0% credit card with at least 12 months of interest-free purchases to do it, which could help you avoid high APRs for paying monthly.
- Shop around – new customers often get better deals, so you could significantly cut your insurance costs by doing research using comparison sites and getting quotes directly from those not on these sites to find a new insurer. If you know you might need to pay admin fees – because you will be changing address, for example – factor in how much insurers charge for these.
- Haggle – you could get a better deal on your renewal quote or haggle your way out of some fees if you threaten to go elsewhere.