- Brits are forgoing annual insurance payments in a bid to save money.
- Almost three quarters of consumers pay for at least one insurance contract monthly
- But monthly payments can mean paying 20% more for the same coverage
Nearly three-quarters (71 percent) of car and home owners pay insurance monthly to avoid high annual bills, even if it means paying more overall.
This represents an increase from 70 percent in March 2023 and 66 percent in March 2022, according to exclusive research from premium finance firm Premium Credit.
The cost of insurance has risen dramatically, with car cover now costing £635 a year and home insurance £364, according to the latest figures from trade body the Association of British Insurers.
This has led many Brits to opt to pay monthly for at least one of their insurance offers to avoid a huge annual bill.
Split the cost? Many motorists and homeowners are turning to monthly payments just to avoid a one-time insurance bill, despite knowing that this will end up costing them more in the end.
But paying monthly means paying more overall, and these customers pay an average of 20 percent extra for exactly the same coverage.
This is because monthly payments may require consumers to sign a loan agreement.
Premium Credit research shows that more than one in seven (15 per cent) motorists have switched to monthly insurance payments since the cost of living crisis began.
This is almost double the 8 percent that shifted from monthly payments to one-time lump sums over the same period.
About 11 percent of home insurance customers have switched from balloon payments to monthly payments, compared to 7 percent who abandoned monthly payments for balloon payments.
| Type of insurance | % you pay monthly in 2023 | % you will pay monthly in 2024 |
|---|---|---|
| Car insurance | 46% | 48% |
| Home insurance | 48% | 48% |
| Pet insurance | 26% | 27% |
| Travel insurance | 19% | 22% |
| Source: Premium Credit Research | ||
Premium Credit strategy, marketing and communications director Adam Morghem said: ‘Monthly is how many of us manage budget, from how we get paid to the bills we pay. Spreading the cost of an annual policy into more convenient monthly payments works for many millions of UK consumers and businesses.’
Premium financing has been criticized several times by the financial regulator, the Financial Conduct Authority (FCA).
Last month, insurers agreed to make financing car insurance premiums cheaper and fairer following a regulatory warning about the product.