Motorists waste £1.5bn a year by auto-renewing car insurance*

21 February 2017

With March one of the busiest months for car insurance renewals, Gocompare.com warns that UK drivers are wasting an estimated £1.5bn a year by allowing their car insurance to automatically renew without checking they’re getting a good deal.

With March one of the busiest months for car insurance renewals, Gocompare.com warns that UK drivers are wasting an estimated £1.5bn a year by allowing their car insurance to automatically renew without checking they’re getting a good deal.

New research*** by Gocompare.com Car Insurance reveals that 5.25m motorists fall for insurers’ auto-renewal ruse, allowing their insurance to be renewed automatically without even checking to see if they could get the same cover for less money.

Gocompare.com’s Car Insurance Auto-Renewal Study revealed that young drivers (aged 18 to 24), who potentially have the most to save, were the most apathetic. Just under a quarter (23%) fell into the auto-renewal trap – leaving their insurance to roll-over without checking other quotes.  When asked why they had auto-renewed their insurance 41% had done so out of loyalty to their insurer while 29% admitted they’d done so because they find car insurance confusing and didn’t have the confidence to switch. 

The survey also found that just under a third (32%) of drivers have been with their current insurer for three years or more, while 22% have stayed with the same provider for four years or more.  However, many of the drivers surveyed don’t feel insurance companies reward them for their loyalty, 59% think insurers give a better deal to new customers than those who renew.

When asked why they allowed their car insurance to automatically renew 31% thought that because their provider was the cheapest last year, they would be good value this time around too.  Other reasons for sticking with the same provider included loyalty (30%), a good experience with a past claim (11%), while 9% said that they weren’t confident enough to switch - finding car insurance too confusing.

Drivers were also asked about the renewal process and the information they receive from insurers.  This revealed that many find the system tricky to understand and lacking key information:

  • Only 29% said they read renewal information thoroughly;
  • A third said renewal information should be made easier to understand;
  • Just 43% check last year’s premium to see how it has changed;
  • Only 29% check their renewal documents for any changes to the cover provided;
  • Over a third (34%) don’t trust insurers to tell them when they are paying too much for cover.

When specifically told that their policy will be automatically renewed but some elements of cover will be changed, 19% of those surveyed admitted to ignoring the warning, assuming nothing very important will have altered.

Commenting on the research findings, Matt Oliver from Gocompare.com Car Insurance  said, “With the first number plate change of the year, March is one of the busiest months for new car sales and, as a consequence - car insurance quotes and renewals.  But, with car premiums hitting record highs, it’s now more important than ever to make sure you’re not getting a raw deal at renewal.

“At renewal, insurers will offer to continue your cover – without you having to lift a finger.  But, what they’re not so good at telling you is that by shopping around you may be able to find the same cover for less.  Loyalty, when it comes to car insurance, generally doesn’t pay.  The best deals nearly always go to new customers. 

“Luckily, fighting back is simple.  Use your renewal letter as a prompt to take action.  As soon as it arrives, read it and compare the price and cover you are being offered against last year’s documents and challenge yourself to beat what you’re being offered.  Consider any changes you might need to make – perhaps to cover levels or drivers’ details - and look at similar policies on a comparison site to see if you can make any savings.

Matt Oliver continued, “It only takes a few minutes to compare over 125 car insurance brands on Gocompare.com, most of the information you’ll need to do this is contained on your renewal notice.  Just over half of customers using our site could save up to £286.44, making it time well spent.

“If you decide to switch you’ll need to tell your current provider.  Most car insurance policies automatically renew unless you notify the insurer to the contrary, if you don’t stop the auto-renewal you could be faced with a hefty cancellation charge.”

Top tips from Gocompare.com on getting the best insurance deals:

  • Give yourself time to review your financial arrangements - diary your car insurance renewal date;
  • NEVER accept your car insurance renewal quote without first checking that the new price you are being offered is competitive – even if your insurer was the cheapest last year;
  • Compare prices AND check the small print.  Make sure you’re making like-for-like comparisons and understand all the charges, any penalties, exclusions and terms and conditions you will be required to meet, and that the product is right for you;
  • Use a comparison website – they provide quick and up-to-date information on a wide range of financial products and services.

Visit Gocompare.com for more information on switching your car insurance.

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Notes to editors:

*According to the Department for Transport’s ‘Vehicle Licensing Statistics: Q3 (Jul-Sep) 2016’ there were 30.9m cars licenced for use on the roads in Great Britain. 17% of motorists auto-renewed their car insurance policy at the last renewal. 17% of 30,900,000 = 5,253,000 (5.25m).
5.25m x Gocompare.com’s average shop around saving of £286.44 = £1,504,669,320 rounded up to £1.5bn.

**By using Gocompare.com customers could save up to £286.44 on their car insurance. Based on Online independent research by Consumer Intelligence 01 July - 30 September 2016; 51% of customers could save up to £286.44 on their car insurance

*** On 10 February 2017, Bilendi conducted an online survey among 2,000 randomly selected British adults who are Maximiles UK panelists; 1,452 held car insurance. The margin of error-which measures sampling variability-is +/- 2.2%. The results have been statistically weighted according to the most current education, age, gender and regional data to ensure samples representative of the entire adult population of United Kingdom. Discrepancies in or between totals are due to rounding.