Add-on insurance and opt-out selling: the rules on pre-ticked boxes

Add-on insurance is cover sold alongside something else you are buying, rather than a policy you went looking for: gadget cover added to a phone contract, travel cover added to a holiday, GAP cover added to car finance. Opt-out selling is the practice of adding it for you and leaving you to remove it. The rules now treat that as unacceptable. Pre-ticked boxes when shopping online, including payment for additional options such as insurance and car rental, are a banned practice¹.

The financial rules say the same thing from the other side. Failing to change a default option such as a pre-ticked box on a website is not an active election by the customer, so it cannot be read as agreement to buy². In practice that means a box you never unticked is not a sale you agreed to, and you can ask for the cover to be cancelled and the premium refunded.

What follows is what counts as add-on insurance, what you must be told before you buy, where the rules stop, and how to get money back or take a complaint further.

What opt-out selling of add-on insurance means

Opt-out selling works by making the purchase the default and the refusal the effort. You are offered a product, the box is already ticked, and the sale completes unless you actively remove it. The consumer rules address the tick itself; the financial rules address whether the firm can treat your silence as consent.

The financial rulebook is explicit that it cannot. Failure by the client to change a default option such as a pre-ticked box on a website is not an active election². The consumer credit rules use the same wording for a customer³. Both carry a date of 1 April 2016, so this is settled rather than recent.

That matters because add-on cover is often bought in a hurry, at the end of a longer purchase, and the person selling it may not be an insurance specialist. The ombudsman has found that misunderstandings are more common where a policy was sold online, as the customer has fewer opportunities to discuss it with the insurer, and that information about no-claims bonuses is not always clear on insurer or comparison sites⁷. The same pattern shows up across add-on markets: the sale is quick, the terms are long, and the gap between what the buyer thought they had and what the policy actually covers only appears at claim stage.

There is also a specific prohibition on tying one insurance product to another. PPI was not to be tied to other insurance offered⁸. That principle, that cover should stand on its own rather than be bundled as a condition of something else, runs through the add-on rules generally.

The ban on pre-ticked boxes for add-on cover

The ban is a consumer protection measure, not an insurance one, which is why it catches car rental extras and insurance in the same sentence. Pre-ticked boxes when shopping online, for payment for additional options such as insurance and car rental, are a banned practice¹.

The financial rulebook reinforces it in two places, and the wording is worth reading closely because it is the sentence a complaint turns on:

The same construction appears in the consumer credit rules³. Neither says the sale is void; both say the customer has not elected. That distinction is what lets you ask for a refund rather than having to argue the policy never existed.

There is a related banned practice aimed at the other end of the relationship, at claim stage rather than sale stage. Requiring a consumer claiming on an insurance policy to produce documents which could not reasonably be considered relevant, or failing systematically to respond to correspondence, in order to dissuade the consumer from exercising contractual rights, is banned⁹. A firm that makes a claim difficult to discourage you from pursuing it is in the same territory as one that made the sale easy to miss.

Information you must get before buying add-on insurance

Where a policy is bought by a consumer in connection with other goods or services, the firm must, before the contract is concluded, disclose its premium separately from any other prices and state whether buying the policy is compulsory⁴. That is the packaged product disclosure rule, and it is the one that does the most work in practice, because it forces the seller to put a number on the add-on rather than folding it into a total.

The general standard sits underneath it. Information about the insurance should be clear, fair and not misleading, and that applies when the customer does not get advice from the business selling the policy⁵. The ombudsman applies the same test to gadget and mobile phone policies bought without advice: information provided at the point of sale must be clear, fair and not misleading⁶.

Sellers also have to point out the awkward parts. The business that sells you the policy needs to draw your attention to any significant and unusual features of the policy, such as key exclusions and restrictions on cover¹⁰. For travel policies, insurers should tell you about the excesses and limits that apply to things like cancellation, medical expenses and baggage¹¹.

Disclosure runs both ways. You must tell an insurance company of any conditions you have before buying a policy¹². If you tell the insurer about a change in health, it can respond by covering the condition for no additional premium, charging an additional premium, applying an exclusion, or withdrawing cover altogether¹³. Getting that wrong is a separate problem from being sold cover you did not ask for, and it is dealt with under giving wrong information to an insurer.

What counts as add-on insurance

Add-on insurance is cover bought in connection with other goods or services. The rulebook's own framing is the packaged product: a policy bought alongside something else, where the seller controls both the purchase and the offer of cover⁴. The common examples are gadget and mobile phone cover sold with a handset, travel cover sold with a holiday, GAP cover sold with car finance, and accidental death or wedding cover sold alongside another purchase.

What each of those actually pays out varies enormously, and that is the point of the disclosure rules.

Travel add-ons carry a further layer of exclusions that catches people out. Items that may not be covered when checked into the hold include photographic equipment and all accessories, sunglasses and spectacles, laptops, tablets, radio and audio equipment and mobile phones, telescopes, binoculars, leather, suede or fur clothing, personal jewellery, gold, silver and watches, video equipment, money, credit cards and passports, stamp, coin and medal collections, works of art, hearing aids, and sports and leisure equipment and musical instruments¹⁶. Gadget policies vary on whether loss is covered at all, depending on the policy¹⁷.

Where the opt-out rules do not apply

The packaged product disclosure rule has a carve-out. It does not apply to policies bought in connection with other goods or services provided as part of a packaged bank account⁴. That does not mean cover inside a packaged account is unregulated, but the specific requirement to disclose the premium separately and say whether purchase is compulsory does not bite in the same way. Packaged accounts have their own complaints history and their own page: insurance in packaged bank accounts.

The unfair terms rules also step back from insurance. Insurance contracts are dealt with through the financial rules and the ombudsman rather than through that particular route.

Doorstep selling rules, which give cancellation rights for sales made at home, exclude a long list: goods and services worth £42 or less, bus, train, flight and other passenger travel tickets, NHS prescriptions and treatment whether free or paid for, financial services such as pensions, mortgages and credit, the construction of new buildings but not extensions, food and drink supplied regularly, gambling, package holidays, timeshares and holiday clubs, contracts to let a property the customer will live in, goods bought from a vending machine, and using a payphone or paying to use an internet connection¹⁹. Insurance sold at home sits inside the financial services exclusion, so the doorstep cancellation right is not the route to a refund.

Getting your money back and complaining about add-on insurance

Start with the firm that sold the policy. Ask it to cancel the cover and refund the premium, and say why: a pre-ticked box, a premium that was not disclosed separately, or information that was not clear, fair and not misleading. If the firm will not resolve it, the complaint goes to the Financial Ombudsman Service, which is free and takes complaints about an insurance company or claim²⁰.

The ombudsman's powers are specific rather than general. On a mis-selling complaint it may ask the insurer to cancel the policy and refund your premiums from the beginning, with interest added to cover the period from when each premium was paid until settlement²¹. Where you would have bought a different policy that would have covered your claim, it can ask the insurer to pay the claim⁵. Where you would have bought the policy but paid extra for an optional cover, it can say the insurer should pay the claim with interest, minus the additional premium⁵.

There are limits on what it will do. Where you made a successful claim under the policy, it would usually say it is unfair for the business to take away the value of the claim from any compensation it pays²². Where a policy is avoided, the insurer must refund your premiums back to the date of avoidance²³. On a motor claim recorded as your fault when it should not have been, it can tell the insurer to change the way the claim was recorded so your current premium can be recalculated, refund extra money paid, and pay compensation for distress or inconvenience for poor customer service⁷.

If the firm that sold the policy has stopped trading, the route changes. Where an adviser is still trading, complaints go to the Financial Ombudsman Service²⁶. Where it is not, the Financial Services Compensation Scheme may be able to help, and there is a separate guide to what happens if your insurer goes bust.

For free, impartial help with the money side of a complaint, or with debts built up by premiums you did not intend to pay, MoneyHelper and the debt advice charities offer it without charge. The ombudsman service itself is free to consumers.