Insurance payment holidays are likely to be approved from next week following recommendations outlined by the Financial Conduct Authority this week. Pressure is growing on insurance firms to offer payment holidays to those who are struggling to make repayments, in a similar way to mortgage holidays that have allowed home owners to defer home loan repayments.
Find out what insurance types are eligible, and when to apply. Then visit our finance hub page for more advice on a range of subjects.
Insurance payment holidays: what types of insurance are eligible?
All type of insurance should be eligible, including home insurance, life and medical insurance, and even your boiler cover or car insurance. In fact, many car insurance companies have already approached their customers with premium adjustments and/or refunds given low car usage during lockdown.
How does an insurance payment holiday work?
Like other payment holiday scheme, the premiums will not be cancelled, but simply deferred for a period of between one and three months. Because insurance cover works very similarly to a loan, you will continue to accumulate interest if you defer payments, so only take the payment holiday if you really need it.
There are other things your insurer can do to reduce your payments for example, they may agree to drop optional extras you don't really need or aren't using, or perform a reassessment that may see your premiums go down. Finally, if you can't see yourself being able to continue paying, they should waive the cancellation fee.
When can I apply?
The new rules come into place from Wednesday 13 May. If your insurer has previously been unsympathetic, they should give you a payment holiday now. Simply contact your insurer by phone or email. If things still aren't working out, consider changing providers, using an online proce comparison website such as Confused.com (opens in new tab).