From today drivers have a right to switch to cheaper policies or request a holiday from their car insurance payments if they are struggling financially as a result of coronavirus.
The new rules from the Financial Conduct Authority even effect people who pay annually for cover - with insurance providers instructed to hand rebates back.
With younger drivers are routinely paying out more than £1,000 a year to insure their cars, it could prove a lifeline.
Insurance firms have also been banned from charging people fees to cancel or change policies in a move that could save people hundreds each.
Louise O’Shea, Confused.com chief executive, said: "Many of us are facing financial difficulties at the moment, so it’s encouraging to see the FCA leading with advice that insurers should be considerate and flexible around customers’ needs at this time.
"Some insurers have already rightly taken action to support customers, through offering premium reductions, discounts, waiving fees, and payment deferrals.
"These temporary measures will help to reduce monthly payments or if you have paid upfront, receive a refund."
What insurers have to offer you now
The FCA said that insurance firms will be required to look at the following if a customer is struggling:
- Reassess the risk profiles - which may have changed because of coronavirus offering room to materially lower premiums
- Consider if cheaper products would be a better fit or add ons are still needed - for example key cover or moving from fully comprehensive cover to third party fire and theft
- Waiving cancellation and other fees associated with adjusting customers’ policies
This could mean a reduction in monthly premiums or a partial refund for customers who paid up front.
If changing the policy isn't enough to make up for payment difficulties, the FCA expects firms to give customers a payment deferral - unless it's obviously not in the customer’s interests to do so.
Payment deferrals will be between one and three months, though the FCA added insurance companies can go beyond three months if they choose to.
Customers can request payment deferrals at any point between 18 May and 18 August 2020.
If deferring payments isn't appropriate, firms have been told to offer other ways to help out people struggling.
These potentially include:
- accepting reduced repayments, or rescheduling the term
- waiving missed or late payment fees
- letting customers to change their repayment date without any cost
The FCA added that is also expects firms to review any interest rates being charged on instalments in case they breach rules on trating customers fairly during coronavirus.
Customers who are struggling should contact their insurer or insurance broker to discuss options.
The FCA added that it's important people don’t leave themselves uninsured and should not hesitate to contact their insurer if they have problems.
