Consumer watchdog Which? has claimed motorists are being “unjustifiably” penalised in another car insurance warning just days after Martin Lewis revealed many drivers were overpaying.
New data from GoCompare, shared with Which?, shows a staggering divide between road users who pay for their car insurance monthly compared to upfront.
Those who spread the charges over 12 months could pay a whopping £300 more as motorists are slapped with high-interest rates.
The statistics reveal that the average annual premium paid by drivers was around £583 in September.
Meanwhile, those paying monthly were billed a staggering £892 for the same service in a massive change.
The scale of the problem is also on the up with the gulf widening between monthly and annual customers compared to a few years ago.
In 2023, motorists paid £309 extra, a 23 percent increase on costs back in September 2022 and £112 more than in September 2019.
Rocio Concha, Which? Director of Policy and Advocacy said: “Car insurance is a legal requirement for motorists – and yet those who can’t afford to pay in one go annually are often being penalised through unjustifiably high interest rates on their monthly repayments.
“That isn’t right – and it’s now up to the financial regulator to outline an action plan to tackle the unfair costs of paying monthly for insurance. The FCA must monitor the issue closely, publishing an analysis every six months of firms’ rates, naming and shaming the worst providers.
“The regulator should also assess how much it costs firms to provide premium credit and shouldn’t hesitate to take action against providers charging monthly customers excessive interest rates.”
To combat the issue, Which? has encouraged road users to shop around to secure the best deal.
Despite price walking for insurance products being banned by the FCA, new customers still appear to get the best deals.
They explained: “Our research has found that many insurers are still open to negotiation. Shop around to see what its rivals are offering, then phone your insurer to ask if they’ll reduce their quote.”
The tip comes just days after Martin Lewis encouraged motorists to do the same thing as he revealed insurance costs had risen by around 67 percent.
In his latest Money Saving Expert newsletter, he encouraged motorists to use the MSE Compare+ Car tool to see how much could be saved at other providers.
He also pointed drivers towards advice on how to haggle with their current policyholders to reduce their bills.
He wrote: “Assessments of how much car insurance rose in 2023 vary from the industry’s (ABI’s) own 29 percent up to Consumer Intelligence analysts’ 67 percent – either way it’s a shedload!”
