Insurance: Annual or Monthly?

[LayZ]

I have always paid for my insurance annually, assuming paying monthly was for the poor. My thinking was that you are basically taking finance from the insurance company at an inflated rate.

However, I am now in the situation where I want to change my car, and the ins company are not offering reasonable terms to do so. I have to cancel my current policy (with 4 months remaining) and basically get sod all back.

The question is - if I was paying monthly, could I just stop paying and thus terminate the contract? Is this a good option if you change your car a lot?

[Jacobyte]

You will have to pay this month's premium, plus probably next month's, plus a cancellation fee. Have a read of the contract and the insurer's informtion will be there.

[Shmee]

I quoted with Admiral for monthly once, the resulting figure was almost double the annual repayment.

[HellDiver]

LayZ said:

The question is - if I was paying monthly, could I just stop paying and thus terminate the contract? Is this a good option if you change your car a lot?

It's still an annual policy, and you are indeed paying for it over the course of the year. "just stop paying" means your policy will be voided, so you'll effectively have been driving 8 months with no insurance.

It's happened a lot over here to customers of a certain cheap insurance company who have gone bust, where said company cocked up payments, cancelled people's insurance early, and then something cropped up and the people have found that according to law they've not had insurance because they don't have a policy to cover them on the date the accident occurred.

I hope I explained it right.

[clarkey328is]

In my experience there is usually a penalty for cancelling the policy.
Companies such as Ecar do a rolling monthly policy that might suit you, it was very expensive for me but may work out better for other people. Their customer service is a bit iffy as far as I'm concerned though.

[Proxy]

As above, there's a cancellation fee.
I had to pay one to More Than recently to cancel the policy on my old Vauxhall Astra - cost me £50 to cancel ...

[hombrepaulo]

In the past I`ve found hanging on the phone complaining about the cancellation charge usually sees them scrap it

[LayZ]

So what about chavs on Road Wars and the like?

They stop paying and they send baliffs after them for non-payment of cancellation fee etc?

[STW2010]

What a stupid assumption- monthly payments are for the poor. I prefer to pay this way as it isn't much more than paying annually, plus it means I don't need to worry about putting £700-800 away to pay it off each year. I could afford to, so I don't choose this option because I'm poor.

People that are incapable of reading simple T&Cs are fking idiots. How's that for a sweeping generalisation?

[Mike 820]

I currently pay 10% extra because I am paying my insurance in monthly instalments.

I cannot afford to pay it all in one go as I simply dont have the cash to hand (£2k+)

[clarkey328is]

STW2010 said:

What a stupid assumption- monthly payments are for the poor. I prefer to pay this way as it isn't much more than paying annually, plus it means I don't need to worry about putting £700-800 away to pay it off each year. I could afford to, so I don't choose this option because I'm poor.

People that are incapable of reading simple T&Cs are fking idiots. How's that for a sweeping generalisation?

It was almost a grand more for me to pay monthly, I assume the interest rates differ between insurance companies. I remember reading something on Moneysavingexpert.com about taking out a 0% credit card to pay your insurance and then paying it off monthly.
Admiral were the company that wanted 2600 as opposed to 1600 for paying monthly. Understandable as I'm a younger driver and it shows commitment to driving carefully with regard to their statistics. (I know there's a no naming and shaming policy but I feel it's good information for younger drivers)

[philoldsmobile]

car is monthly, but I stumped up the whole £63 for the bike in one go!

[Mastodon2]

Off topic but...if you pay annually and wish to change to a faster car and new insurer, you have to stick with your old car until the year ticks over to get your next years NCB don't you, unless you get a new car and stick with the same insurer and pay an increased premium, or you lose what you have worked towards for that years NCB?

Not going to be changing my car for a few months yet, but my 2 years NCB ticks over in October and there are some hefty discounts to be had. However, if I buy a new car before then I will have to pay my current insurer a wedge of cash to see the year out (assuming they will even let me change) so that I don't bin a few more months work towards another years NCB.

What a pain in the arras!

[fuzzyyo]

STW2010 said:

What a stupid assumption- monthly payments are for the poor. I prefer to pay this way as it isn't much more than paying annually, plus it means I don't need to worry about putting £700-800 away to pay it off each year. I could afford to, so I don't choose this option because I'm poor.

People that are incapable of reading simple T&Cs are fking idiots. How's that for a sweeping generalisation?

When I got my insurance the cheapest monthly I found was half as much again as the cheapest annual. When you pay monthly the insurance company effectively loan you the annual amount and then charge a load of interest on that amount.

If you cancel either a monthly or annual you will still pay a cancellation fee. Better off paying the annual and effectively pay less per month; then if you cancel early you get your refund and haven't paid as much. (assuming you have enough to pay the annual outright)

[ludicrous speed]

Depends on how much the insurance is whether it's worth it or not. Another option would be to take out a credit card with a 12 month 0% period, use the credit card to pay the lump sum then pay a bit off each month.

[chopper602]

Even paying the whole amount with a credit card 0% or otherwise will be cheaper than paying the interest the insurance company charges (often about 25%). I always pay my insurance off in one go (but then the MIto policy is only about £250 and the 2CV is less than £100).

[ludicrous speed]

LayZ said:

The question is - if I was paying monthly, could I just stop paying and thus terminate the contract? Is this a good option if you change your car a lot?

I pay monthly, and have changed cars twice within the last year, You don't need to terminate the contract, I simply switched the new car onto the current policy ditching the old car and then they just ammended my monthly payments to what it would be for the new car.

[Chrissellar]

I was in a similar situation to the OP when I changed my car back in November. I was with shift cover in a Clio 1.4 and wanted to upgrade to the megane R26 but the insurance company wouldn't cover it, ended up getting to cancel the insurance with a rebate and no cancelations fee. Only thing I lost was the no claims I was earning that year. It was what they called a cat 99 car - what ever that means.

So if your cancelling your insurance try and pick a car your current insurer won't touch with a barge pole.

Oh hi everyone btw this is one of my very first posts (although been reading the site for years)

[AB]

I always thought you were effectively taking the finance on the lump sum rather than a monthly policy?

I.e. You're contractually locked in exactly as you would be if you paid a one-off lump sum.

[parapaul]

AB said:

I always thought you were effectively taking the finance on the lump sum rather than a monthly policy?

I.e. You're contractually locked in exactly as you would be if you paid a one-off lump sum.

Exactly that.