Tips On Uncovering Hidden Costs On Short Term Insurance Before You Buy

Choosing a short term car insurance policy (details from www.e-personals.info/short-term-car-insurance.html) can be a daunting task. While it is easy to say one should simply go for one with the cheapest rates, this can turn out to be expensive as a result of other hidden costs that the customer may not be aware of.

When looking for a good insurance policy, one has to look at a number of things, not just the price, to know the true cost of the policy they are purchasing. Below are some things that one should look at:

1) Cancellation Charges

In a recent survey, it was found that more than 66 percent of UK insurers charge the customer a fee for cancelling a policy. Instead of simply retuning the remaining portion of the premiums, companies are charging up to £85 as cancellation fees.

While other insurance companies do not charge a flat fee, they use systems that ensure the customer does not get a full refund of the unused portion of the premiums. For example, someone who cancels a policy half-way through the year may only get 30% of the premium. Those who cancel within 3 months may even not get any refunds.

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2) Monthly Interest Rate on Premiums

Many people opt to pay premiums on a monthly basis as opposed to an annual lump sum. While this may be convenient, it is usually expensive in the long run as some providers charge interest rates on the monthly payments, sometimes as high as 37%. Before you purchase a policy, work out the math to know what your total cost would be when the premium is paid annually and monthly.

Singing up for a monthly premium payment plan means you will be charged monthly interest rates. This will make your total yearly payments expensive.

3) Policy Amendments

If you will be amending your policy during the period of its existence, know that you may be liable to pay additional charges. Amendments can be anything from changing your address when you move homes to adding an additional driver to the policy. According to the Which? survey, the highest amendment fee levied among 105 insurance companies that were surveyed was £55.

Although it can be difficult to predict whether you will need to make any changes in your living address, it is wise to read the terms and conditions of the insurance company to know of any charges that you will be liable to pay in case of moving.

4) Late Payments

If you have opted to go for monthly premium payments, it is important to pay on time. In case of financial strains or situations where you may have to delay your payment, call the insurer in advance and let them know of the situation.

Many insurance companies have penalties in the form of additional fees for late payments. Some also charge administrative fees. Depending on the amount of policy you have purchased, you may have to pay up to 30% of your policy for late payments. Thus, it is important to go through the terms and conditions of the company before you sign the contract. Check all the fees that you may be applied to you at one time or the other and consider whether the “low rate” that the company is offering are truly low.

Getting a good short term insurance policy in UK is all a matter of shopping around to get the best deal. The ideal policy is one that comes at an affordable rate and favourable payment terms. Apart from the rates, consider hidden fees that may be outlined on the terms and conditions of the company.