Abbey National Insurance has hit out at rivals who charge customers extra to pay their motor or home and contents insurance premiums monthly.
Abbey says more than £600m is being paid each year by insurance customers just for the convenience of paying monthly and not for the actual insurance cover.
Latest research shows that more than £460m in extra charges is paid for motor insurance and £170m for home insurance by customers who choose to pay monthly.
Abbey says that these charges are usually made in the form of interest or an administration charge applied to the monthly premium. And in many cases the charges can amount to 10% or more of the premium. This means, for example, a premium of £247.19 for a 2002 Rover 25 Impressions Hatchback can lead to a total yearly repayment of £290.81, some 12% more just to pay monthly.
Janet Connor, marketing director of Abbey National, says: “Why should the vast majority of customers pay extra for paying monthly? We do not believe customers should be penalised for paying insurance premiums in the most convenient way possible – and for most people this is by paying monthly.”