Staying loyal to your existing car insurance provider could leave you £42 out of pocket. That’s according to new research published this week.
It found that 17.1 million drivers let their insurance auto-renew in 2020, at a cost of £720 million – a seven percent increase on 2019 (£674 million). Around 41 percent of drivers let their policy auto-renew, according to one price comparison website.
One in five policyholders saw an increase of £26 to £50, while nine percent saw increases of £51 to £75. Eight percent saw a rise of between £76 and £100.
It’s surprising to discover that eight percent of drivers allow their insurance to renew automatically, WITHOUT shopping around for a cheaper deal. A fifth (20 percent) stay where they are simply for ease.
Kate Devine, car insurance expert at MoneySuperMarket, said: “Letting your car insurance auto-renew almost always sees you end up paying more, with our research showing that the average premium increase last year was £42.
“While it’s great to see that many of us are shopping around for a better deal, the number of people allowing their policy to auto-renew is still high, at 41 percent.”
Transparency rules
In April 2017, the Financial Conduct Authority (FCA) introduced new rules designed to increase transparency at renewal time and to encourage motorists to shop around for new quotes.
Insurance companies must show the customer the premium to be paid on renewal and the price paid for the previous year. In addition, the providers must include text encouraging consumers to check that the level of cover is appropriate for their needs and that they are able to shop around.
In October 2019, the FCA said the new rules were delivering customer savings of between £39 million and £330 million a year.
Despite this, the MoneySuperMarket research found that 51 percent of drivers do not recall seeing these notifications. Of the remaining 49 percent, a third said they did not encourage them to shop around.
Kate Devine added: “If your policy is up for renewal, you should always shop around to see what deals are on the market – a new deal on your car insurance is very easy to find online and could save you up to £218.”
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