More automotive and residential insurance coverage prospects pay month-to-month to dodge large payments
- Britons are turning away from yearly insurance payments in a bid to save money
- Almost three-quarters of consumers pay monthly for at least one insurance deal
- But monthly payments can mean paying 20% more for the same cover
Almost three-quarters (71 per cent) of car and home owners are paying for insurance monthly to avoid high annual bills – even though this means paying more overall.
This is a rise from 70 per cent in March 2023 and 66 per cent in March 2022, according to exclusive research from premium finance firm Premium Credit.
The cost of insurance has risen dramatically, with car cover now costing £635 a year and home insurance £364, according to the latest figures from the Association of British Insurers trade body.
This has led many Britons to choose to pay for at least one of their insurance deals monthly to avoid a massive annual bill.
Splitting the cost? Many motorists and homeowners are turning to monthly payments just to avoid a one-off insurance bill, despite knowing this will end up costing them more in the end
But paying monthly means paying more overall, and these customers pay an average of 20 per cent extra for the exact same cover.
This is because monthly payments can require consumers to enter a loan agreement.
Premium Credit’s research shows that more than one in seven (15 per cent) of motorists have switched to monthly insurance payments since the cost of living crisis started.
That is nearly double the 8 per cent who have switched from monthly payments to one-off lump sums over the same period.
Around 11 per cent of home insurance customers have switched from lump sums to monthly payments, compared with 7 per cent who ditched monthly payments for lump sums.
| Insurance type | % paying monthly in 2023 | % paying monthly in 2024 |
|---|---|---|
| Car insurance | 46% | 48% |
| Home insurance | 48% | 48% |
| Pet insurance | 26% | 27% |
| Travel insurance | 19% | 22% |
| Source: Premium Credit research | ||
Premium Credit strategy, marketing and communications director Adam Morghem said: ‘Monthly is how many of us manage budget, from how we are paid to the bills we pay. Spreading the cost of an annual policy into more convenient monthly payments works for many millions of UK consumers and businesses.’
Premium finance has come under fire several times from the financial regulator, the Financial Conduct Authority (FCA).
Last month insurers agreed to make car insurance premium finance cheaper and fairer following a regulatory warning about the product.
