The Financial Conduct Authority (FCA) has issued new guidance to insurers designed to help customers struggling to pay their premiums due to the Coronavirus pandemic. The new measures will come into force on Monday 18 May 2020 and cover all types of general insurance. It means that insurers will need to offer flexibility on payments including payment deferrals of up to three months, although firms can go beyond three months should they wish to do so, and it is in the customer’s interests.
Insurers should also consider whether there are other products they can offer which would better meet the customer’s needs and revise cover accordingly. For example, a motor insurance customer might no longer need associated add on cover such as key cover or could be moved from fully comprehensive cover to third party fire and theft.
Insurers will also need to waive fees for cancellation or any amendments, such as reducing annual mileage for car insurance. The new measures are temporary and will be reviewed after three months.
Lee Griffin, CEO and one of the founders of GoCompare, commented, “The new guidance will be welcomed by stretched households up and down the country, but it is still down to customers to request these measures, in most cases. We would urge anyone in need of financial help at the moment, to talk to their insurer immediately and ask them about a payment deferral and other ways in which they can help.
“Insurance, and car premiums particularly, can be a significant monthly outgoing for many people and millions of households are facing a period of reduced income as a result of the current pandemic. These steps will hopefully ensure that these customers can reduce their outgoings while remaining insured and protected.
“We know that many insurers have already put measures like these in place and have been helping customers amend policies to reduce costs. But this guidance should ensure a uniform response from the industry.
“It is also important to check your insurance renewal date, as the other way to reduce the cost of insurance is to shop around for a better deal. We expect some insurers will look to reduce their new business premiums in the next few weeks as a result of the lockdown, as a way to attract new customers. If that is the case, there could be some very significant savings for customers who shop around and switch at renewal.
“Currently, the average GoCompare Car Insurance customer saves up to £283 by switching provider. We would encourage any car owner to make a note of their renewal date this year and set aside some time to shop around. It only takes a few minutes and it could save you a significant amount of money.”
GoCompare has provided a six-point plan for anyone worried about paying for their car insurance at the moment:
• Speak to your current insurer as soon as possible and ask them what they can do to help in terms of reducing or deferring premiums.
• This may include lowering your stated annual mileage to see if it reduces your premium. There should be no administrative charge for doing this.
• Check what ‘add-ons’ you are paying for – for example, key cover – which you may be prepared to remove from your policy to save money. Again, check there will be no administrative charge for doing this.
• You could reduce your cover level to third party, fire, and theft to see if this lowers your premium. Remember though, if you lower your cover level and then incur accidental or malicious damage, you won’t be covered. Again, check with your insurer that there will be no administrative charge for doing this.
• If you can keep your car off the road temporarily, then you could SORN the vehicle. But beware, this would mean that you will have no insurance cover at all. You may still want cover for fire and theft (sometimes called a ‘laid-up’ policy).
• Check when your insurance renewal date is. If it is due shortly, shop around to see if you can get the cover you need for a much cheaper price.
For more information on Coronavirus and your money visit: https://www.gocompare.com/coronavirus-insurance-money/