Are Insurance Companies Picking Your Pocket with Installment Fees?
Lately, California’s auto insurers have been slipping unjustified service fees onto bills – even when policyholders don’t use the service.
Take the “installment fee” or “finance charge” for example. Nearly all the big auto insurance outfits in California -- Auto Club, GEICO, State Farm, Mercury, Progressive, 21st Century -- charge these fees to policyholders who pay their premium in parts, instead of in full at the beginning of a six month or one year policy term. The fee is charged per payment and can either be a flat fee (“installment fee”) or a percentage of the unpaid premium (“finance charge”). They average about $5 per payment.
Insurers are allowed to charge these fees. In fact, it has become industry standard. As we predicted in 2007, however, we’ve seen abuse of these fees crop up everywhere.
Insurers have begun charging these installment fees to people who pay their premiums in full at the beginning of a policy term. We’re seeing a disturbing billing trend where installment fees are added to the total premium amount that is due for the entire term, so even savvy consumers who take steps to avoid the fees get duped into paying.
Have you been unfairly hit with an installment fee? Click here to tell us your story.
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