Car insurance costs pushed up by administration fees

Motorists are paying more for car insurance as a result of rising administration fees, according to Defaqto.

The independent financial research company found providers are frequently adding these fees to their products and that the scale of administration fees imposed on consumers has also risen dramatically since 2004.

In the past six years, the percentage of car insurance policies charging setup fees has increased from two per cent to seven per cent, while the number adding adjustment fees has shot up from 17.3 per cent to 67.1 per cent.

Mike Powell, insight analyst for general insurance at Defaqto, said: "There has been a noticeable and significant trend for motor insurance policies to charge administration fees for features that were in many cases previously standard services. Many consumers will be unaware that they may actually be paying a set up fee or a renewal fee for their motor insurance . Such fees will be detailed in the accompanying documentation or in the renewal quote ."