Which hits out at 'sneaky fees' for home insurance customers


Home insurance customers risk being hit with surprise admin fees which bump up the cost of their policy and make it harder to compare deals, an investigation by Which? has found.

The consumer group, which looked at the fees charged by 36 major home insurers in September, found that people can be charged up to £25 for making a change to their policy, up to £55 for cancelling it and £5.95 to pay for their insurance by credit card.

Six insurers were found by Which? to make a charge for copying a document, with Endsleigh charging the most for this at £20.

Four insurers charged a fee for paying for insurance by credit card, including Admiral - which charged a flat rate of £5.95, Which? said.

Half of insurers were found to charge an adjustment fee for making changes to a policy, such as updating an address, with the cost ranging from £8.48 to £25.

Which? said that if someone cancelled their policy after a 14-day cooling off period, any refund they would get for the remaining period could be eaten up by cancellation fees.

Three-quarters of insurers were found to levy such a charge. Cancellation fees ranged from £20 for customers of Endsleigh and Tesco Bank to £55 from Esure and Sheila's Wheels if someone cancelled in the first year, reducing to £35 after that. 

When assessed against a number of factors relating to charges, including credit card fees, cancellation fees and duplicate document fees, Barclays and Lloyds Banking Group came out top, Which? said, while Endsleigh was ranked bottom.

Which? said that as well as not charging additional fees, Barclays and Lloyds paid generous switching fee contributions. This is cash that a provider pays towards any charges the consumer faces for switching to it before their current policy ends.

The consumer group also found that across the industry generally, it is not always easy to check up-front what fees someone might be charged in advance. This could make it harder to work out which deal is going to be the best.

While most insurers included their fees in the policy documents on their websites or in a "FAQs" section, some required people to get a quote before setting out their fees.

Which? carried out the investigation as part of a campaign it is running called "stop sneaky fees and charges".

The consumer group is urging the Financial Conduct Authority (FCA) to consider whether admin fees are masking overall prices 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 up-front about their additional fees and we want the regulator to consider whether these fees are really justified."

A spokeswoman for the Association of British Insurers (ABI) said: "If a customer makes a change to their policy they may be charged an administration fee, which will have been set by either their broker or the insurer depending on additional costs incurred and how the policy was purchased.

"Any fees should be clearly and fully disclosed, in accordance with the requirements of the industry regulator, so that customers know exactly how much they have to pay for their insurance and any changes they make. We would advise customers to read their policy documents carefully and speak to their insurer or broker if they have any questions."

A spokeswoman for Endsleigh said: "We regularly review the levels at which our fees are set. On average, the fees we charge do allow us to keep our premiums low for customers within our target market.

"We are transparent with our customers about the fees they might incur and these are clearly displayed on our website within our FAQs section so customers can review before getting a quote. It is very important to us that the cost of our services remain competitive and, above all, that our customers are satisfied."