Car insurance customers who have not already benefited from the deal will still have time to apply to the scheme which freezes all payments for those who may be struggling financially. The new extension will mean customers can apply for a three month extension up until 31 October.
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Car insurance payment holidays would ‘better reflect’ car use
This means some motorists could end up with car insurance disruption into the start of January 2021.
However, the new extension does not mean firms need to offer customers more than a three month freeze unless this is considered to be in the driver’s interests.
Drivers whose payment holiday is set to end but still find themselves struggling may be able to get some alternative help.
The FCA says firms should continue to consider what they can offer customers who may have been deeply affected due to the effects of the coronavirus pandemic.
Alongside premium freezes, other measures which look set to be extended include price reductions.
Motorists will still be able to change their risk profiles and switch to different policies under the extension.
This could see those who have a fully comprehensive deal switch to a third party, fire and theft agreement if it would be more cost effective.
Drivers who used to have a commuting or business policy may also find their cover slashed if their circumstances have changed and they are working from home.
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Average mileage could also be reduced as less journeys have been made and earlier predictions are unlikely to be met.
Firms should also continue to waive fees associated with switching cover or cancelling terms.
But there are fears this could see some drivers leaving their existing car insurance company for a better deal at a separate firm.
The FCA’s original measures came into force on 18th May and are being reviewed by the agency every three months.
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But, drivers have been warned to make sure any car insurance agreement “meets their demands and needs”.
They have urged drivers to not leave themselves with no insurance cover and pushed drivers to make sure they speak to their provider if they are struggling.
A statement from the FCA said: “It is important that customers don’t leave themselves uninsured, and that their insurance cover meets their demands and needs.
“Those struggling to afford their insurance or premium finance payments because of the impact of coronavirus should contact their insurer or insurance broker to discuss their options.”
However, some experts have warned motorists against taking a car insurance payment holiday unless they were really struggling.
Money Saving Expert Martin Lewis has warned interest rates will continue to be added onto a policy even if it is frozen.
This will lead to higher costs which will be picked up by motorists when the pandemic has ended.
Speaking on the Martin Lewis Money Show in May, he said: “You can get a payment holiday but remember this is for monthly payments on insurance.
“Technically what happens is they pay for you and loan you the money to pay by the month, usually with a hideous interest rate.
“That interest rate will keep racking up so don’t take this payment holiday unless you really really need the cash flow.”
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