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Aviva launches new subscription-style insurance: how does it compare?

Subscription services hit the mainstream insurance market

Aviva launches new subscription-style insurance: how does it compare?

Insurance giant Aviva is launching a new subscription-style insurance service to end the insurance rip-off that sees loyal customers punished by ever-increasing insurance premiums. But will it offer you a cheaper rate than standard insurance?

AvivaPlus is a new pay-monthly subscription service for customers wanting to buy home insurance or car insurance. It aims to make insurance more flexible and allow customers to change their cover as often as they want without incurring charges.

Here, we take a look at how AvivaPlus works and whether you’ll be any better off using it.

What is AvivaPlus?

When you think of subscription services, things like Spotify, Netflix and even Amazon Prime might spring to mind but very soon, insurance companies could also join the list.

AvivaPlus has been launched the service to address concerns – raised in a super-complaint from Citizens Advice to the competition watchdog – that insurance customers who are loyal to their providers end up paying more than new customers.

Indeed, Which?’s own research has found that loyal home insurance customers pay 38% more for their cover, on average, compared to new customers.

The new service will not replace Aviva’s standard insurance and customers will still be able to buy a regular home insurance or car insurance policy.

How does AvivaPlus work?

AvivaPlus allows you to pay monthly for home and car insurance like you would a Netflix subscription.

The product is made up of the following features:

No monthly interest

AvivaPlus customers won’t have to pay interest on their monthly payments.

No cancellation fee

Similarly to other subscription services, customers of AvivaPlus won’t have to pay a cancellation fee when they decide to leave. There isn’t a notice period either which means that you can cancel your policy at any time.

Renewal price guarantee

AvivaPlus comes with a price guarantee which means that if you choose to renew your policy, the price you’re quoted will be the same or better than a new AvivaPlus customer. This doesn’t mean, however, that AvivaPlus will match competitors’ prices, nor that your premium won’t increase each year either.

Is AvivaPlus cheaper?

Aviva has confirmed that there is no guarantee that the new AvivaPlus insurance will work out cheaper than its standard policies.

This means that, depending on your circumstances, you may actually find it cheaper to take out Aviva’s regular insurance instead.

Due to the way that insurance is calculated, the price you pay is likely to vary depending on your personal circumstances, so it’s really important that you shop around and compare quotes from different providers before deciding on a policy.

How does AvivaPlus compare to other insurance providers?

While Aviva is the first major insurer to offer subscription-style insurance, it’s not the first provider to try and address issues outlined in the Citizens Advice super-complaint.

NFU Mutual, for example, reward loyal customers through a loyalty bonus scheme which gives existing customers money off of their premiums if they renew.

Currently, existing customers can get a 13.5% discount when they renew for the first time. The discount reaches a maximum of 18.5% after five years of renewals.

Some insurers also offer similar features to AvivaPlus on their standard insurance policies too.

No monthly interest

Exclusive Which? analysis revealed that seven big-name home insurance companies out of 20 don’t charge interest on monthly premiums. These include Barclays, Age UK, Santander, NatWest, NFU Mutual, M&S and Legal & General.

For car insurance, only two out of the twenty providers analysed – Age UK and NFU Mutual – don’t charge interest on monthly payments.

No cancellation fee

Similarly to AvivaPlus, four out of 20 home insurance providers don’t charge a cancellation fee if you choose to end your policy early. These include Barclays, Age UK, NFU Mutual and John Lewis.

Only two out of 20 car insurance providers that we looked at – Age UK and NFU Mutual – don’t charge a cancellation fee if you decide to leave early.

What are the different types of AvivaPlus insurance?

You’ll be able to choose to one of three tiers of home or car insurance policy, offering increasing levels of cover. We’ve noted the differences between the tiers in the tables below.

Home insurance

Basic Regular Premium
Buildings £500,000 £1m Unlimited
Contents £50,000 £100,000 Unlimited
Jewellery, watches & valuable items £5,000 £20,000 £50,000
Accidents at home Not covered Optional Included
Accidents & theft away from home Not covered Optional Up to £2,000
Legal Services Optional Optional Included
Home Emergency cover Optional Optional Optional

Car insurance

Basic Regular Premium
Car cover Accident, fire and theft (excluding glass) Comprehensive Comprehensive
Glass (including windscreens) Not covered Included Included
Courtesy car Optional 3-door hatchback Five-door 1.6 litre
Cover for hire car excess Not covered Not covered Included
Driving other people’s cars Third party Third party Comprehensive
Personal belongings None £150 £2,000
Onward travel after an accident Home only £150 £150
Motor Legal Services Optional Optional Included
Foreign use Not covered Optional Included

When will AvivaPlus be available?

AvivaPlus is currently being rolled out to customers on a phased basis.

According to Aviva, the product went live just over a week ago is now available to 10% of people who visit the Aviva website.

The rollout will continue over the next few weeks and is expected to be available to everyone in early 2019.

If you’ve already got a home insurance or car insurance policy with Aviva, you will be able to get AvivaPlus without having to pay a cancellation charge for your old policy.

AvivaPlus and your credit score

One way to improve your credit score is to pay for insurance monthly.

For example, according to Experian who generate credit scores on a scale of 0-999, successfully paying for your car insurance monthly rather than annually will add 20 points to your credit score.

Paying in instalments is classed as a credit agreement, similar to taking out a loan from your insurance provider, and means that if you fail to meet your repayments, your credit score will take a hit.

While AvivaPlus uses data from credit reference agencies to check your identity and calculate your risk profile, its subscription insurance does not constitute a loan.

Meeting your monthly repayments will not boost your score and if you default on your monthly insurance bill, your score won’t negatively be affected either.

How to get cheap insurance

Shopping around for insurance is key and price comparison websites are a great way to compare lots of deals quickly.

Don’t just go for the cheapest policy, as it may not offer you the cover that you need.

If after shopping around you still want to stick with your current insurer, be sure to haggle a better renewal price. You can use better deals that you’ve found elsewhere as leverage to get a cheaper offer.

Before signing on the dotted line, read the terms and conditions of any policy carefully.

Insurance policy small print is notoriously difficult and has been found to baffle readers so if you’re unsure about anything, get in touch with the provider for clarification.

Once you’ve agreed to the terms of a policy, making a claim for things that are excluded will be impossible.

For more information check out our guides on how to find cheap home insurance and how to find cheap car insurance.

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