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[geoffr70]

Ahaaaaa! This has been touched on in another post somewhere but I have often thought this.

If you buy a mars bar from the shop, you pay the full price up front and take your goods away. A mars bar is tangible, a physical thing. You receive it all at once, therefore you pay all at once.

When you buy car insurance, should you decide to pay by monthly installments, the insurer or broker will charge you interest, normally at quite a high rate? Why is this? Insurance isn't a tangible thing. You do not receive the product/service or whatever you want to call it, all at once.

You receive the insurance cover over the space of a year (normally), therefore why is interest charged? This is wrong.  Is it not better to pay over a space of time, as you receive the cover over a space of time, with 12 monthly installments being the most obvious and convenient?

Don't get me wrong I'm not a socialist 'people power against the big nasty companies'' sort of person, and I pay my insurance upfront in a onner.

What does anyone else think?

[Vamps]

Ahaaaaa! This has been touched on in another post somewhere but I have often thought this.

If you buy a mars bar from the shop, you pay the full price up front and take your goods away. A mars bar is tangible, a physical thing. You receive it all at once, therefore you pay all at once.
When you buy car insurance, should you decide to pay by monthly installments, the insurer or broker will charge you interest, normally at quite a high rate? Why is this? Insurance isn't a tangible thing. You do not receive the product/service or whatever you want to call it, all at once.

You receive the insurance cover over the space of a year (normally), therefore why is interest charged? This is wrong.  Is it not better to pay over a space of time, as you receive the cover over a space of time, with 12 monthly installments being the most obvious and convenient?

Don't get me wrong I'm not a socialist 'people power against the big nasty companies'' sort of person, and I pay my insurance upfront in a onner.

What does anyone else think?

But you should only bite 1/52 each week so that it lasts the year.... and you can pay for your insurance like so, if you want to pay a load of interest...

[Banjax]

paying up front in a oner guarantees the money, with direct debits they can be cancelled, there might be problems getting the money, mistakes can be made - its just more of a risk to a company and more of a pain - the higher price reflects the fact theyd rather encourage you to pay up front instead 

[51M0N]

this really annoyed me. Admiral were £840 upfront or with instalments it went up to £1134 !!! 

[STMO123]

paying up front in a oner guarantees the money, with direct debits they can be cancelled, there might be problems getting the money, mistakes can be made - its just more of a risk to a company and more of a pain - the higher price reflects the fact theyd rather encourage you to pay up front instead 

That's absolute pap. Whenever a financial transaction takes place, if the option of finance is available, they would prefer you to take it. In the case of insurance, they stand to make huge profits, hence it is now covered by the consumer credit act of 1974.
When buying any item, such as a car, the seller is paid upfront by the finance company and the salesman receives a nice commision for flogging the finance.

I tried to pay cash for the wife's megane and they took half an hour rather around before they came up with a finance package that I would agree to. Anything but cash.

[henryd]

this really annoyed me. Admiral were £840 upfront or with instalments it went up to £1134 !!! 

they did the same with my lad on his 206,but as he is 18 and still at college he had no choice but to go with it,any bloody wonder a lot of these youngsters drive with no insurance is it

[51M0N]

The company i used to be with i paid around £450 but then they were taken over by someone else and wanted 3k! Admiral were still the cheapest. Hopefully the renewal will bring it down to 3 figures in November.

[henryd]

The company i used to be with i paid around £450 but then they were taken over by someone else and wanted 3k! Admiral were still the cheapest. Hopefully the renewal will bring it down to 3 figures in November.

we had a similar problem.his last years insurance was around £580,when the renewal came this year it was £1500 and thats with a years no claims

[geoffr70]

paying up front in a oner guarantees the money, with direct debits they can be cancelled, there might be problems getting the money, mistakes can be made - its just more of a risk to a company and more of a pain - the higher price reflects the fact theyd rather encourage you to pay up front instead 

Ah yes Banjax, I see what you're saying. We all know about people paying installments, getting their certificate and then cancelling the payments. Seems daft though as all the police do on a roadside check is ring the insurers anyway!

Although I understand where youre coming from, this is a different issue I believe. I can't see any justifiable reason why interest is charged on installments apart from money grabbing people. I edge more towards the right, and capitalism, but there are abuses of everything.

Compare it to council tax or your water bill. It's the same. What you pay for is received over the space of a year, therefore you pay over that time, well ten months, but crucially, without interest. There'd be hell on if people were charged interest on council tax or water bills, but we all seem to accept it on car insurance.

[51M0N]

The company i used to be with i paid around £450 but then they were taken over by someone else and wanted 3k! Admiral were still the cheapest. Hopefully the renewal will bring it down to 3 figures in November.

we had a similar problem.his last years insurance was around £580,when the renewal came this year it was £1500 and thats with a years no claims

Due to all the people not bothering, I also blame immigrants not having the correct licence or cover for pushing prices up.

[Banjax]

paying up front in a oner guarantees the money, with direct debits they can be cancelled, there might be problems getting the money, mistakes can be made - its just more of a risk to a company and more of a pain - the higher price reflects the fact theyd rather encourage you to pay up front instead 

That's absolute pap. Whenever a financial transaction takes place, if the option of finance is available, they would prefer you to take it. In the case of insurance, they stand to make huge profits, hence it is now covered by the consumer credit act of 1974.
When buying any item, such as a car, the seller is paid upfront by the finance company and the salesman receives a nice commision for flogging the finance.

I tried to pay cash for the wife's megane and they took half an hour rather around before they came up with a finance package that I would agree to. Anything but cash.

if you're buying insurance directly the company receives what you give it...they dont get money elsewhere, and we're not talking about finance we're talking about paying the premium upfront or by dd   

[Entwood]

The additional money or interest .. covers the additional "risk" the insurers are taking.

If have an accident a month after taking out the insurance you would expect the insurers to pay in full no doubt ??  You'd be pretty pisssed off if they only paid you 1/12 as thats all the premium you had paid ?? They have to cover full liability from day 1 so charge you "extra" to cover the convenience to you of spreading the cost.

Council does not have to cover all its cost on day 1. It pays its workers over the whole year, so can take your money over the whole year .. it only needs to finance each month as it comes .. same with water, gas, electric etc etc.

You are comparing lemons and oranges .. both are fruit but are different.

[Lazydocker]

The additional money or interest .. covers the additional "risk" the insurers are taking.

If have an accident a month after taking out the insurance you would expect the insurers to pay in full no doubt ??  You'd be pretty pisssed off if they only paid you 1/12 as thats all the premium you had paid ?? They have to cover full liability from day 1 so charge you "extra" to cover the convenience to you of spreading the cost.

Council does not have to cover all its cost on day 1. It pays its workers over the whole year, so can take your money over the whole year .. it only needs to finance each month as it comes .. same with water, gas, electric etc etc.

You are comparing lemons and oranges .. both are fruit but are different.

I agree with you in some respect Entwood, but there are some insurance companies who have a clause that if you make a claim you must settle the balance of your premium in full

Admittedly, AFAIK, most of the big ones don't but some do

[I_want_an_Omega]

This will only help those of you over 50, BUT ....... although Saga charge extra for paying monthly in advance, but no extra for paying 3 months in advance. So now I pay a quarter of my premium ever 3 months - best of both worlds  for me anyway.

[51M0N]

This will only help those of you over 50, BUT ....... although Saga charge extra for paying monthly in advance, but no extra for paying 3 months in advance. So now I pay a quarter of my premium ever 3 months - best of both worlds  for me anyway.

Only 28 years to go!