How home and car insurance firms are ripping you off by £144 a year – but you can stop it
Customers fork-out extra to spread the cost of their premiums over 12 months
MILLIONS of insurance customers are stuck in a "vicious cycle" of monthly payments - AND are being financially hit for the privilege.
Price comparison site GoCompare found drivers are spending an extra £144 a year and home insurers £113 a year on average, when compared to those who pay in one go.
When buying insurance you are normally given the option to spread the cost of your premium over a year, or by paying in one lump sum, which is usually cheaper.
In one example, it found a typical car insurance premium of £498 rocketed to £597 when paid monthly - an extra £99.
Unsurprisingly poorer drivers and home insurers are more likely to spread the cost of their premiums.
GoCompare found that nearly half (47 per cent) of drivers from lower income households pay monthly compared to 29 per cent of high earners.
Some 53 per cent of lower income households pay monthly for their home insurance, compared to higher income families.
Those who do pay monthly are also 33 per cent less likely to switch providers - meaning they are missing out on potential savings when it comes to renewal time.
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Georgie Frost of GoCompare said: "If you pay monthly for your insurance, you will almost always end up paying more.
"Remember - when you pay monthly you’re not really paying for your insurance, you’re paying back a loan that comes with interest charges.
"Not only will you pay more because of that credit, but our research shows that you are less likely to switch in future if you pay monthly, and that could end up costing you even more each year.”
How to cut your insurance bill
Insurance can be an expensive outgoing. Here's how you can save on your premiums.
Shop around: Never accept the premium that is offered by your current insurer and never auto-renew. Use a price comparison site to see what deal you can get. If your insurer can't match it, then switch.
Improve security: Adding an imobiliser to your car or an alarm to your home can bring down the price of your premium.
Pay in one go: If you can afford to pay your premium in a lump sum, then do so as you will save money over the course of the year.
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