Aviva to launch monthly 'subscription' insurance service – but how does it stack up?

Aviva says it will be launching the AvivaPlus service in the next few weeks in response to concerns that insurance customers who are loyal to one company pay more – concerns highlighted by a recent 'super-complaint' from Citizens Advice to the competition watchdog.

Customers with AvivaPlus will be able to cancel their policy at any point penalty-free, and the price they pay will be fixed annually. At the renewal point, prices may rise but Aviva says the price you pay will always be the same it would charge a new customer getting a quote – so existing customers won't pay more.

While Aviva is the first major insurer to offer this kind of payment model and the service does give a good degree of flexibility, it's unclear how it will compare on price and it may cost more than policies with other insurers or Aviva's standard policies.

It's always worth comparing different insurers to find the best deal – see our  and  guides for full help.

How will AvivaPlus work?

Usually with car and home insurance, you pay much more if you pay monthly rather than upfront for a year – essentially, you're taking out an expensive loan, and are charged interest every month. You also usually face a charge if you leave before your contract's initial term is up.

Aviva's standard policies follow this model – and will continue to do so for now. But AvivaPlus, which will be offered alongside Aviva's existing products, will be different in the following ways:

• You won't be charged more for paying monthly. The price you pay won't include any interest for paying in monthly instalments.

• You'll be able to leave at any point penalty-free. There's no annual contract, so Aviva says customers won't face any charges if they want to change policies or cancel. There's no notice period, so you can cancel at any time.

• Existing customers won't be charged more than new customers after renewal. Prices will be reviewed each year and could still rise, but Aviva says it guarantees that the price you get will be the same or better than if you were a new AvivaPlus customer. However it's worth noting this doesn't mean AvivaPlus will match competitors' prices or that your price won't go up each year.

How does AvivaPlus compare?

There's no doubt that AvivaPlus will offer much more flexible insurance cover than most policies – but the key question is how it will compare on price.

Insurance prices can be hard to compare as quotes vary depending on your circumstances, but it's worth noting Aviva says there's no guarantee AvivaPlus will work out cheaper than its standard policies and some customers may find Aviva's standard products to be a better deal. This is particularly the case if you know for sure you'll need a full year's cover and won't want to leave early.

Whether you're getting home or car insurance, always do a full comparison to make sure you're getting the best deal, plus check insurers comparison sites miss (including Aviva) and look for special deals. See our Cheap Car Insurance and Cheap Home Insurance guides for full step-by-step help.

I'm an existing customer – can I switch to AvivaPlus?

Existing Aviva customers who want to move to AvivaPlus will be able to do so without paying a cancellation fee, even if you're part way through a contract.

As above though, it's possible your price could go up when you do this and you might be able to get a better deal elsewhere – including with Aviva if you haggle. So if you're looking to cut the cost of your insurance, always do a full market comparison.

What does Aviva say?

Aviva's UK insurance chief executive Andy Briggs said: "We recognise that consumers want the insurance industry to listen to them so we've worked with thousands of customers to understand how insurance could better meet their needs and provide the flexibility they want for their modern lives.

"Importantly, AvivaPlus addresses price disparity, regarded by an overwhelming majority (82%) of consumers as one of the most unfair practices of the insurance industry.

"With our renewal price guarantee, which ensures existing customers are offered the same or an even better price than an equivalent new customer, we're creating a level playing field for new and existing customers."