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Has Covid left you paying for insurance you can’t use?

Coronavirus and the resulting restrictions turned the world upside down, leaving many people paying for insurance they could not use.


The UK’s financial watchdog, the Financial Conduct Authority (FCA), has been concerned that customers with general and protection insurance policies might not be getting real value for money during the pandemic.

It urged firms to act and offer customers reduced premiums and partial refunds of premiums already paid.

So, if you paid for car insurance or private medical cover, for instance, and you couldn’t use it due to COVID-19 measures, you may yet be able to claim rebates for part of your premium.

Plus, if you paid for travel insurance but no longer wish to travel, you may also be able to get some money back.

Refunds have been offered to existing customers, so contact your insurer as soon as you can and before any policy expires.

Refunds have been offered to existing customers, so contact your insurer as soon as you can

Car insurance: less driving

Many motorists drove way less than expected during the last year when stuck at home during lockdowns.

Car usage plummeted as people started homeschooling or stopped driving to work due to unemployment, furlough or working from home.

This matters because the price of motor insurance is partly based on the distance you expect to drive.

If your annual mileage has been a lot lower, contact your insurer to request a refund for part of your premium.

Let them know if your driving habits changed too – if you were no longer driving for business or commuting at peak hours, for example – as this could also cut costs.

Insurer Admiral automatically gave customers a £25 refund for each car and van covered on 20 April 2020, and Churchill has also contacted customers to give them money back, but elsewhere it’s up to you to request a refund.

Some insurers may charge an admin fee for changes to your policy, but the savings could still be worthwhile.

For example, the total amount paid by customers of pay-per-mile insurer By Miles over the course of 2020 fell 25%, directly in line with the reduction in their mileage.

Each policyholder saved an average of £44 compared to the price quoted at the start of the year.

For some motorists, changes are likely to continue, for example, if you continue with flexible working rather than returning to a 5-day-a-week commute.

If so, make sure any new policy reflects the lower expected mileage rather than automatically accepting a renewal quote.

According to research by Compare the Market, car insurance premiums have fallen by £103 since the UK’s first coronavirus lockdown in March 2020, with the average now standing at £652. This is the lowest price average since 2015 – so look out for savings.

If your annual mileage has been a lot lower ask your car insurer to adjust your premium

Health insurance: postponed procedures

During parts of 2020, the National Health Service (NHS) took overcapacity in private hospitals to cope with the pressure due to increasing Covid cases.

As a result, many non-urgent procedures booked in private hospitals had to be cancelled or postponed.

Some insurers are actively passing on cost savings to customers. Not-for-profit medical insurer WPA paid out rebates to customers in April and June 2020, and BUPA is due to refund customers roughly a month’s premium.

Several other insurers, including Axa, Aviva, Saga and The Exeter, have promised to pass on any extra profits to their customers once the full financial impact is clearer.

Elsewhere, it’s worth contacting your insurer about a refund if you reckon you didn’t get the insurance you paid for.

Just be aware that the private health insurers argue that many of their benefits could still be provided, such as remote care, musculoskeletal clinicians and mental health practitioners.

Instead of requesting a refund on travel insurance ask for a policy extension

Travel insurance: cancelled trips

The pandemic really ripped up holiday plans when travel was banned during the lockdowns.

Even holidays after international travel can resume may be in jeopardy depending on the destination and the hassle and expense of any quarantine and Covid testing.

If you bought travel insurance but no longer wish to travel abroad, ask your insurer if you can get a partial refund if you’re sure you won’t need the cover. This could apply whether you bought a single trip policy or annual cover.

Just remember that you can’t claim a refund if you’ve already claimed on the policy.

If you bought your travel insurance ages ago, check the date carefully as policies purchased before 11 March 2020 may include cover for Covid related cancellation and travel disruption, which many more recent policies won’t.

If so, you might be better off asking if you can extend your insurance to cover a future trip rather than requesting a refund.

Don’t forget that while you may think that this article is brilliant, it is intended for information purposes only and should not be mistaken for financial advice or recommendations.

3 things to do
right now

1

Check the mileage you have actually driven compared to the mileage estimated when taking out your car insurance policy. You may able to request a partial refund if it’s a lot lower than expected or your driving habits changed.

2

If you took out travel insurance but no longer wish to travel, ask your insurer for a pro-rata refund – provided you haven’t already claimed on the policy.

3

Contact your insurer sooner rather than later, so you don’t miss out on a rebate if your policy expires.

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