A recently published report has shown that drivers in the UK choosing to pay for their car insurance monthly rather than annually are considerably worse off. Figures included in the report show that paying car insurance premiums monthly can result in paying up to 40% more than you would had you paid for it up front.
There are currently around 33 million motorists in the UK. With about 13.2 million of these drivers choosing to pay for their insurance monthly, there are a huge number of people currently paying significantly more for their car insurance than they would if they paid it annually. In the UK, the average annual car insurance policy currently costs £778. When paid for monthly the same insurance policy could rise to £953.
Whilst most people are aware of the increased cost in paying for car insurance monthly rather than annually, just how much more expensive paying monthly can be will shock many. This is an extremely profitable tactic for car insurance providers. The reasoning behind it is that insurers see direct debit cover as a loan on the cost of an annual policy. If a motorist has an accident in the first month of their cover, the insurer still has to pay out without having received the total premium.
Taking this into consideration, the obvious solution to this problem is for all motorists to pay for their insurance policy annually. Unfortunately, this is not a realistic solution for many drivers as they are unable to afford the larger one-off payment required to pay for an annual car insurance policy.
In fact there are very few clear solutions to this issue. Where possible, motorists should try to pay for their car insurance annually as this will save them money over the 12 month period. The other key factor to saving money on your car insurance is to ensure that you shop around and compare a number of car insurance policies to ensure you find the best value policy available. The price comparison site Moneysupermarket.com compares over 100 leading car insurance providers making it easy to find cheaper car insurance. Be sure to visit the site when searching for a car insurance policy.
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