British Motorists Could Save £1.6 Billion Opting for Annual Car Cover Payments

CHESTER, England, April 17, 2013 /PRNewswire/ --

• Paying monthly for car insurance adds an average £89 to each policy
• Average premium for drivers paying annually is £532, versus £621 to pay monthly

Drivers paying for their car insurance each month, rather than once a year, could save £89 each - or £1.6 billion collectively as a nation - by switching to an annual payment, according to research by MoneySupermarket.com.

Almost 24 million car insurance quotes^[1] analysed by the UK's number one comparison site found just under half of motorists (48 per cent) opt to pay for their insurance monthly, at an average cost of £621 a year.  However, drivers who pay for their insurance once a year are spending an average £532 - or £89 less. Therefore, those drivers paying monthly could collectively save £1.6 billion a year simply by changing the way they pay.^[2]

Interestingly, the analysis also reveals that those who pay monthly do so because they typically have higher premiums.  On average those who pay monthly have an annual cost 24.7 per cent higher than those who actually choose to pay yearly.  As most would expect, cost is therefore a deciding factor for those opting for more manageable monthly payments.                                                                   

Peter Harrison, car insurance expert at MoneySupermarket, said: "Running a car certainly isn't cheap, and while insurance premiums have fallen steadily recently, the benefit of that is unfortunately diminished by the rising cost of fuel and other motoring costs. It can be a huge strain on a family's finances by paying an upfront annual premium for car insurance therefore, spreading the cost and paying monthly is a way to ease this burden. However, it could end up costing you more in the long run.

"A handful of insurers refrain from doing so, but more often than not an additional cost will be applied if you opt for paying monthly rather than annually. The analysis clearly shows there are definite cost benefits overall to paying annually.

"Cash strapped motorists could consider other financially-savvy ways to spread the cost of their premium, such as using a zero per cent purchase credit card. Putting the cost of the premium on to a zero per cent purchase credit card, such as the Tesco Bank Clubcard Credit Card which offers 0 per cent on purchases for 16 months, allows drivers to spread the cost of their premium, effectively paying monthly without the additional interest. There are a number of zero per cent purchase cards on the market, so if you are eligible, you'll only pay for the original price of your policy, although your insurer may charge a small fee if you pay via a credit card. If you choose to pay using this method, you will need to be disciplined. Paying the balance off in full within 12 months will ensure that you won't be paying for this policy when your new one kicks in."

Notes to Editors:

^[1] Total quotes: 23,734,951, or almost 24 million.

^[2] There are 36,500,000 drivers in the UK, and 48 per cent - or 17,390,777 - are paying monthly for their car insurance.

This means approximately 17.4m drivers could each save £89 on their annual bill by switching to a one off payment.  This would mean a total saving in the UK of £1.55 billion, or £1.6 billion.        

National Travel Survey 2011, Department for Transport

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/35738/nts2011-01.pdf

Office for National Statistics 2011 Census, Population and Household Estimates for the United Kingdom

http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-270247

MoneySupermarket.com compares (at 22^nd March 2013)