Car insurance firms must waive fees and allow delayed payments, says watchdog 

The Financial Conduct Authority instructs car insurers to try and save customers money and allow deferred payments

Shopping around for car insurance

Car insurance firms have been instructed to waive fees and allow delayed payments in order to help customers who are experiencing financial difficulties due to the coronavirus pandemic.

The Financial Conduct Authority (FCA) has told car insurers that they must waive cancellation and other fees that customers usually have to pay when adjusting their policies, as well as reassessing customers’ risk profiles in order to see if their premium can be lowered.

Firms must also consider whether there are other products they can offer which would suit a customer’s needs better than what they’re currently signed up to, and revise their cover accordingly. For a car insurer, this could mean reviewing whether a customer still needs an add-on they have - such as key cover - or if they could be moved from a fully comprehensive policy to a third party one.

These requirements are designed to reduce the payments of customers who pay monthly, or result in a partial refund for those who pay the full annual premium up front.

Deferred payments

If no amendments can be made to a customer’s cover to alleviate their payment difficulties, the FCA expects insurers to defer payments for between one and three months. Firms can choose to defer a customer’s payments for more than three months if they wish to do so and it’s in the customer’s best interests.

In cases where a payment deferral is not appropriate, the FCA says insurers should look into other options, such as accepting reduced payments, waiving missed or late payment fees, or allowing a customer to amend their repayment date at no additional cost.

Firms are also expected to review interest rates to ensure they are fair, as well as encouraging customers to contact them if they are having difficulty making payments.

The measures were the result of a brief FCA consultation and will come into effect on 18 May 2020.

Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “As with other areas of finance, we have worked quickly to draw up measures to help policyholders in financial difficulty because of coronavirus. The majority of respondents expressed support for the proposals we published at the start of May.

“Many firms in the insurance industry have already taken some of the actions we are suggesting here to support customers, such as premium reductions, discounts, waiving fees, and payment deferrals. The measures confirmed today will provide urgent support to those that need it.”

Tell us about your experiences with car insurance companies during the coronavirus pandemic in the comments...

Recommended

Average car insurance premium increases to £809
Car insurance policy laptop
News

Average car insurance premium increases to £809

The average cost of a car insurance premium has increased six per cent over the past 12 months, to £809
19 Apr 2020
Cat S and N cars: new insurance write-off categories
Car crash
Tips & advice

Cat S and N cars: new insurance write-off categories

New Cat S and Cat N insurance write-off classifications have replaced the old Cat C and Cat D groups; we explain all.
11 Sep 2020
Car insurance claims spike as rusty drivers return to roads
Car insurance

Car insurance claims spike as rusty drivers return to roads

The easing of lockdown in England saw a jump in claims, with the biggest leap occurring in south-central England
5 Jun 2020
What is a no claims bonus?
Rear end shunt - car crash
Tips & advice

What is a no claims bonus?

For many drivers a no claims bonus is the ticket to cheaper car insurance. We explain what it is and how to earn it
5 Jun 2020

Most Popular

How green are electric cars? Polestar data shows ICE trailing EV
News

How green are electric cars? Polestar data shows ICE trailing EV

Electric car maker reveals whole-life CO2 emissions of the Polestar 2 are better than a petrol XC40 - but EV is only 14% cleaner with global energy mi…
17 Sep 2020
New Nissan 400Z previewed with Z Proto concept
Nissan 370Z

New Nissan 400Z previewed with Z Proto concept

The Z Proto concept hints at the next Z car, which is likely to be named the Nissan 400Z, but the production model won’t be coming to Europe
16 Sep 2020
New BMW 128ti prototype review
BMW 1 Series

New BMW 128ti prototype review

The new BMW 128ti has its sight set on the Volkswagen Golf GTI
15 Sep 2020