Whatever you need cover for, insurance policies – and the paperwork they come with – come packed with information. So it’s easy to sometimes miss certain facts and costs.
That’s why we’ve created this simple guide to administration fees, charges, cooling-off periods, and more.
What is an administration fee?
Insurers use administration fees (also known as “admin fees”) to cover the cost of processing or making any changes to your policy once the cover has begun.
However, if you don’t make any changes to your policy during its term, insurers are unlikely to charge you any admin fees.
How do admin fees work?
Any change to your policy can incur an admin fee, even if it doesn’t increase the premium. For example, if you get married and want to change your surname on the policy, your insurer can charge you an admin fee to do so.
While admin fees often apply when you make changes to your policy, insurers can also charge you for other tasks, like renewing the policy or duplicating paperwork. These fees are usually fixed amounts, but the amount may differ depending on the task.
Read on below to learn more about the different types of admin fees.
What is the purpose of admin fees?
By charging admin fees, we’re able to keep our premiums as low as possible.
Insurers don’t charge admin fees to create profits. Instead, they use admin fees to help them recover the costs their business takes on to manage and maintain your policy (staff costs, maintaining complex telephone systems, record-keeping, etc.).
If insurers didn’t charge admin fees, they would likely increase the price of their policies to offset these costs.
Rules allow insurers and financial institutions to charge admin fees. But they have to make sure these fees are always ‘reasonable’, and reflect the actual cost of processing their customers’ policies.
Most insurers charge admin fees – at Admiral, we regularly check ours to make sure they’re fair.
What are the most common admin fees?
Insurance customers have a wide variety of requirements across an equally varied number of products and services. As a result, there’s often a range of admin fees to reflect all the different scenarios insurers handle.
For example, common types of admin fees include:
- adding or removing an additional driver
- having a black box fitted or removed from your vehicle
- updating your address
- removing a vehicle
- changing your annual mileage
- cancelling your policy
- modifying your car
- duplicating your policy documents
What's an insurance cooling-off period?
Whenever you buy an insurance policy, insurers are legally required to give you 14 days where you can cancel the policy for any reason. This is known as the cooling-off period.
During the 14-day cooling-off period, you can cancel your new insurance policy with no questions asked. (For life insurance policies, the cooling-off period is usually 30 days.)
The cooling-off period allows customers to avoid potentially being stuck with a policy they no longer want.
Once you’ve agreed to the policy, the 14-day cooling-off period starts from when you receive the paperwork or when the cover begins (whichever is later).
Can I cancel my insurance within 14 days?
Yes. It's a legal requirement that every UK insurer provides their customers with a 14-day cooling-off period. If you want to cancel your policy during this period, make sure to contact your insurer as soon as you can.
If you cancel your policy during this 14-day period, you are legally entitled to a refund.
That said, insurers can still charge you for the number of days the policy was active, so you wouldn’t get 100% of your premium back. They might also charge you a cancellation fee.
To avoid any unexpected costs, make sure to check the terms and conditions of your policy first.
How much does it cost to cancel insurance?
When it comes to cancelling insurance, cancellation fees can vary quite a bit. Some insurers don’t charge cancellation fees at all, while others can charge over £100.
Usually, cancellation fees are higher if you cancel your cover after the 14-day cooling-off period.
To get a better idea of how much it might cost you to cancel your cover, be sure to check with your insurer beforehand.
How much does it cost to make changes to an insurance policy?
Just like cancellation fees, the total cost of admin fees can vary quite a bit. While some insurers might charge £20 for their most expensive change, another might charge a lot more.
Alternatively, some insurers might even let you change your details online for free (but only if you do so online).
If the changes you make to your policy increase the premium, then it’s worth bearing in mind that you would also have to pay the increased premium on top of any admin fee.
To avoid any unexpected costs, we recommend checking what sort of admin fees your insurer will charge you, and how much they will cost.
Where can I find out what Admiral's insurance admin fees are?
To see a breakdown of the fees we charge to cancel or make a change to your policy, read our charges and fees explained page.
There, you can see how much we’ll charge you:
- if you cancel your policy within 14 days
- if you cancel your policy after 14 days
- to remove or change an item from your MultiCover policy
- to make a change to your policy information
- for changes to Littlebox policies
- for other changes or issues
- if you pay your monthly Direct Debit late
