The option to pay monthly is better for many people, as it means you don’t take a big hit that month to your family budget. One day insurers will feel the wrath of Martin Lewis and others for their high interest rates on this option, so it’s worth bearing that in mind as you set up plans on Motor, Home and Travel in particular. Here’s the word from Premium Credit;
Nearly two out of three (64%) of consumer insurance customers would take out less cover or opt for cheaper policies if they could not pay monthly, new research from the UK’s leading premium finance company, Premium Credit, shows.
Premium Credit’s Insurance Index, now in its seventh year, found strong support for being able to pay monthly for insurance with more than one in five (22%) saying they would sell their cars if they could not pay monthly for insurance. Around one in six (16%) would stop home contents or buildings insurance if they could not pay premiums monthly.
The index, which monitors how consumers pay for insurance, found customers are increasingly switching to monthly payments for car and home insurance. Around a quarter (24%) questioned said they have started paying for car or home cover monthly in the past year having previously made a one-off payment for the total cost. That includes 12% who have switched to paying monthly for both.
Last year’s index found 19% of motorists had switched to monthly payments for insurance since cost-of-living challenges started in 2021 and the previous year’s study found 15% had switched to monthly payments. Around 15% of home insurance customers switched to monthly payments over the same period according to last year’s index while 11% did the same two years’ ago.
Premium Credit is advising customers to consider premium finance which, for a small charge, enables them to pay monthly for cover instead of in a lump sum. Spreading payments in such a way can help ease cash flow challenges and make paying for vital insurance more convenient.
There are signs insurance customers are planning to increase their level of cover in the year ahead with car insurance the most likely. Around 13% questioned plan to boost their level of motor insurance cover while 12% plan to do so for home insurance.
Nearly one in 10 (9%) will increase pet insurance cover and travel insurance in the year ahead while 10% will do so for life insurance and health insurance. The research found 15% of insurance customers have started using brokers in the past two years in order to get expert advice.
Mona Patel, consumer spokesperson, at Premium Credit said: “Insurance customers very much value being able to pay for cover monthly and it is clear that not being able to do so would have a major impact.
“The research shows people are increasingly switching to monthly payments for car and home insurance and the availability of monthly payments may also be helping consumers planning to improve cover levels with large numbers planning to upgrade in the year ahead.
“Finance from insurers and premium finance are central to enabling insurance customers to pay for cover monthly and many would struggle to upgrade the level of insurance cover they have if they had to pay a lump sum.”
Dave Taylor, Chief Customer Officer at leading MGA Somerset Bridge added: “Customer payment preferences have changed over the last five years with more customers using premium finance, linked both to rising motor insurance premiums, partly fuelled by inflationary repair costs, and other economic pressures adversely affecting disposable income.”
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