Pay-as-you-go Car Insurance Charges

Insurers usually charge for pay-as-you-go cover on a month-to-month basis. These are considered FuturePay agreements whereby motorists pay for insurance in advance, via debit or credit card. This scheme may be set up through a financial partner of the insurer. The policy automatically renews every month, charging the motorist's card until the motorist cancels the policy.

Premium and Excess

Every insurance policy includes a premium and an excess. The premium is what the motorist pays each month for cover. It's determined by the insurer based on driving history, age, and other characteristics. The excess is the amount of the claim that the motorist is expected to pay towards the cost of any claim. Excesses have two components: the voluntary excess and the compulsory excess. The latter cannot be changed; it's required and set by the insurer. The voluntary excess is chosen by the motorist and may be anywhere from £0 to £500. Choosing to pay a higher excess does affect one's premium. If the motorist agrees to a higher excess, the premium will be lower because there is a smaller risk that the insurer will have to pay out a minor claim.

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No Claims Bonus

If drivers have built up a no claims bonus whilst covered by another insurer, they need to provide the new insurer with proof. Insurers accept varying proof, but many will accept a private car bonus, an EU bonus if translated into English by a sworn translator, a commercial vehicle bonus, a letter of proof from one's company attesting to a period of claims free driving on a company car, or a motorcycle bonus, among others. Many insurers refuse to accept proof of a no claims bonus from more than two years past. A no claims bonus usually only applies to one policy, so motorists probably can't use their bonus for two separate policies at the same time.

If the insurer doesn't accept one's proof of no claims discount as valid, they may cancel the policy. Should they cancel the policy, they may refund the premium if the motorist returns the certificate of insurance within a certain time limit. Insurers will likely apply an administrative charge, perhaps £75. If the insurer doesn't cancel the policy, they will adjust the premiums and may apply an extra non-disclosure penalty, perhaps 20% of one's premium. These charges are entirely avoidable, so motorists should determine what constitutes acceptable proof of their no claims discount and provide it promptly.

Miscellaneous Charges

Pay-as-you-go cover sometimes includes other charges as well; for instance there could be a monthly administrative charge, of perhaps around £7.50. Many insurers also charge fees for duplicates of documents or non-standard letters, perhaps two or three pound upwards There may be others, as well, so motorists must, as always, read the small print before ordering a policy.

 

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