Brits Vastly Underestimated the Cost of Hidden Fees

A recent survey has revealed that UK consumers are massively underestimating the financial impact of hidden fees by a staggering 13-fold. While the average estimate of the annual cost of admin fees to Brits was around £45 million (ALA, 2025), the true cost amounts to over £593 million per year, in 2022. Since then, admin fees and hidden costs have crept up alongside rising insurance premiums. This dramatic underestimation highlights how intermittent admin charges impact everyday finances and how they can negate the benefits of a cheap insurance quote.

In this article, we explore how British drivers really feel about hidden car insurance costs and their true impact. We highlight how choosing a reputable and transparent provider doesn’t have to sacrifice affordability.

Hidden Fees Are Unacceptable, Say the Majority of Brits

The overwhelming consensus from our research is clear: hidden fees and excessive admin costs are widely viewed as unjustified (ALA, 2025). This sentiment was strongest when it came to admin fees, despite most policyholders only needing to make a change less than once a year.

• 58% of respondents said that admin and hidden fees for cancelling or transferring a policy were unacceptable, and they would be unhappy with any fee.
• The highest tolerable fee, according to our survey, was £75, which is well below the highest fees charged by some insurers.
• A further 68% found it unacceptable to be charged admin costs for making minor changes to policy details, such as updating an address or registration plate.
• The highest acceptable fee for these types of changes was £60, though very few would feel that a minor administrative change justified any charge.

The Hidden Costs of “Budget” Insurance

While some administrative tasks, such as cancelling a policy or transferring ownership, may require some internal processing, the fees charged often appear excessive. Many GAP insurance providers charge £10–£35 in admin fees for routine policy updates, with some motor insurers demanding up to £180 to cancel a policy mid-term. Even during the cooling-off period, some companies can charge as much as £125 for cancellation.

In fact, the average cancellation fee during the cooling-off period increased 31% between 2022 and 2024. This trend suggests insurers are sneakily inflating car insurance costs while appearing price-competitive. Car insurance prices rose by 60% in 2023, incentivising policyholders to switch providers for a better price, but this comes at a cost.

Additional charges can also act as a deterrent to switching providers, even when better deals are available, creating what many feel is a “lock-in” effect that penalises flexibility.

78% Say Hidden Fees Are Unfair

An unsurprising 78% of people said that hidden or unclear admin charges are unfair. This sentiment wasn’t just about the cost, but also about the lack of transparency. Respondents commonly voiced that fees should be “clearly stated”, “upfront”, and “not buried in obscure sections of policy documents”.

Some respondents shared their frustration at discovering charges only after initiating a change. One user remarked, “They charge too much for next to nothing,” while another said, “If there’s a genuine reason for the fee and it’s explained properly, that’s more understandable.”

A prevailing opinion was that “admin costs should already be included.” Tasks like updating a phone number or address should already be factored into the quote and business costs, rather than added on as unavoidable extras.

34% Would Pay More for No Hidden Fees

The survey also found that 34% of consumers would be willing to pay a higher upfront premium if it meant avoiding unreasonable fees later on. In fact, respondents said they’d be willing to pay up to 5% more for a policy that guarantees no admin or cancellation charges, suggesting that over one third value peace of mind over chasing the lowest quote.

However, this willingness to pay more is complicated by another insight: 60% of people said they investigate hidden fees before taking out an insurance policy, indicating a trust gap between insurers and customers. That gap becomes a costly surprise when they’re hit with unexpected charges. One user remarked that discovering unexpected fees “removes all trust in the company”.

Transparency Cultivates Trust: ALA’s Customer-First Approach

As frustration with hidden costs grows, companies that choose transparency and fairness stand out. ALA is known for its fair pricing and customer-first policies. We are raising the bar for other insurance companies by offering customers competitive quotes and zero hidden charges.

ALA Insurance:

• Eliminates all admin, cancellation, and transfer fees, offering customers flexibility without penalties. Our customer loyalty speaks for itself.
• Accounts for all support and administrative costs in its core business expenses, rather than passing them on to customers.
• Avoids commission-based incentives for its customer service team, focusing on genuine support. Read about our award-winning customer service.
• Offers competitive price guarantees for similar GAP insurance policies.
• Allows customers to spread payments for car warranties on 0% APR finance, making it easier to manage monthly expenses.

British consumers are fed up with unjustified hidden fees. However, they have become so normal that more than half of users distrust a quote at face value. The survey data show that most drivers feel these charges are unnecessary, unfair, and poorly communicated. Many would willingly pay more upfront to avoid the stress of discovering extra costs down the line.

The £592 million a year (2022) in hidden fees represents not just a financial burden, but a breach of trust. Consumers want to feel that the companies they rely on to protect their finances are honest and fair, not just offering low prices to undercut competitors.