Two-thirds of consumers would cut insurance cover without monthly payments

Nearly two-thirds of insurance customers would reduce their level of cover if they could no longer pay for policies monthly, according to new research from premium finance provider Premium Credit.

The firm’s latest Insurance Index found that 64% of consumers would either take out less cover or opt for cheaper policies if monthly payment options were unavailable, underlining the of premium finance provision in the personal lines market.

The research, conducted by PureProfile among a nationally representative sample of 1,000 UK adults between 13 and 18 March 2026, found some consumers would consider more drastic action if forced to pay annual premiums upfront.

Around 22% said they would sell their car if they could not spread the cost of motor insurance, while 16% said they would stop purchasing home buildings or contents insurance altogether.

The findings come amid a continued shift towards monthly payments. Nearly one-quarter (24%) of respondents said they had switched from paying annually to paying monthly for their car or home insurance during the past year, including 12% who had done so for both products.

Mona Patel, consumer spokesperson at Premium Credit, said the findings demonstrated how important payment flexibility had become for customers.

“Finance from insurers and premium finance are central to enabling insurance customers to pay for cover monthly and many would struggle to upgrade the level of insurance cover they have if they had to pay a lump sum,” she said.

Payment preferences

The trend has strengthened in recent years. Premium Credit’s 2025 Insurance Index, conducted by Viewsbank among 827 adults between 7 and 10 March 2025, found that 19% of motorists had switched to monthly payments since the start of the cost-of-living crisis.

The 2024 survey, based on responses from 1,122 adults between 15 and 18 March 2024, recorded a figure of 15%.

Despite affordability pressures, the latest research suggests many consumers are looking to enhance their insurance protection over the next year. Motor insurance was the product most likely to see increased cover levels, with 13% planning upgrades, followed by home insurance at 12%.

Dave Taylor, chief customer officer at Somerset Bridge Group, said: “Customer payment preferences have changed over the last five years with more customers using premium finance, linked both to rising motor insurance premiums, partly fuelled by inflationary repair costs and other economic pressures adversely affecting disposable income.”