New research has revealed that around 16.8 million drivers let their car insurance auto-renew last year. It cost them a heady £674million, which is an increase of 175 percent on the year before.
This is according to MoneySuperMarket, which found that around 41 percent of drivers let their insurance renew automatically, incurring significant cost increases. That’s more than double the 17 percent of drivers who allowed their policy to auto-renew in 2018.
It’s always worth shopping around
So how much does your insurance increase when you let it lapse? Seventy-three percent of drivers saw increases of an average of £40. Meanwhile, 20 percent saw increases of between £51 and £125.
So why aren’t people shopping around, rather than suffering this auto-renewal ‘tax’? Well, 21 percent do so because it’s easier. Indeed, letting it renew requires the least effort, with 16 percent saying changing provider would be too much work. Incredibly, 11 percent of those that don’t shop around, avoid it because they don’t think there are savings to be made.
Are car insurers breaking the law?
In April 2017, new rules were introduced by the Financial Conduct Authority. These required insurers to prominently notify drivers of the price they’re currently paying, and the price they will pay if they let their policy renew. Worryingly, 58 percent of drivers have no recollection of such a notification.
“If you let your car insurance auto-renew you’ll more than likely see an increase in your premiums, with our research showing that the average premium can increase by £40,” said Dave Merrick, car insurance expert at MoneySuperMarket
“Although some of us are shopping around for a better deal, the number of people allowing their policy to auto-renew has doubled in just a year, meaning that even more people are paying a loyalty tax by staying with their insurer.”