Car insurance customers to be hit with ‘unfair fees’ and ‘increases’ despite new 202 rules

Martin Lewis warns viewers about drastic car insurance changes

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Experts at home insurance provider Urban Jungle warn drivers should still be “wary” of some providers. They warned drivers could still be hit by massive “hidden fees” while some car insurance prices could “increase” as a result of the new rules updates.

The news comes just days after the Financial Conduct Authority (FCA) introduced new guidance to firms.

They have banned companies from price walking, a practice where costs increased year on year for existing customers while offering budget rates for new ones.

Instead, firms must now offer similar prices for new and existing customers to make contracts fairer.

Despite the change, Jimmy Williams, founder and CEO of home insurance provider Urban Jungle said drivers still needed to “carefully read contracts” before signing a deal.

He said: “For people looking for a new provider, it’s important to now pay attention to the rest of your policy to ensure that other unfair fees are not going to surprise you, such as for early cancellation.

“There may still be practices from oh-so-trustworthy providers to be wary of.

“We look forward to the regulator forcing our competitors to warmly welcome an end to hidden fees too, for example.

“We’d encourage all consumers to carefully read any contract before signing.

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“As a knock-on effect to the changes, we predict there could be price increases to other insurers.”

The FCA has estimated the new measures will save consumers around £4.2billion over 10 years.

They said the updates will help the “market work better” and help deliver “fair value to consumers”.

However, the FCA has predicted firms will no longer offer “substantially low-priced deals to some consumers”.

Other motoring experts have also warned some drivers could be hit by higher fees as a result of the changes,

Ursula Gibbs, Director at Compare the Market, warned some firms may decide to “hike premiums”.

She said: “While the rule changes should end the loyalty penalty, this does not mean that auto-renewing your insurance will get you the best deal.

“People should be careful not to fall into any traps as insurers may decide to hike premiums for a large number of customers if they can’t charge existing customers more.”

Meanwhile, money-saving expert Martin Lewis warned policies for new customers would likely increase.

Speaking previously on the Martin Lewis Money Show, he said: “But in the short term though, switchers prices will be likely to jump.

“Why? Don’t expect the existing customers to drop to the new customers level.

“They are likely to meet in the middle somewhere so prices for switchers will rise.”

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