Car insurance renewals: Should I auto-renew my car insurance policy?

Does car insurance automatically renew?

Unless you tell your car insurance provider otherwise, it’s likely your policy will automatically renew.

That means, if you don’t give notice of cancellation, your insurer will sign you up for another year of car insurance as soon as your current policy ends.

Sometimes you’ll be charged more for the year ahead, even if nothing’s changed on your policy and you haven’t made any claims.

So, although it can seem like less hassle to just let your insurance roll over for another year, you could be missing out on savings with another provider for the same level of cover by letting it auto-renew.

How do I know if my policy auto-renews?

Check the terms and conditions in your policy documents. If the provider intends to auto-renew your policy, this should be clearly stated.

If you’re unsure, contact your insurer.

Is auto-renewal legal?

It’s entirely legal for insurers to auto-renew your car insurance contract, as long as they’ve let you know that’s what they’ll do. It should be on emails or paperwork they send to you.

Auto-renewal helps providers keep customers, year after year. It also helps to reduce the number of people driving around without insurance, simply because they forget to renew.

Your provider will normally contact you about four weeks before your car insurance is due to renew. At this point, you’ll be offered a renewal price for your policy, which may be more expensive than the previous year.

Also, your insurer is legally obliged to:

• Tell you last year’s price, so you can easily compare it to your new premium
• Tell you to check the cover and shop around for the best deal
• Provide additional messaging to customers who’ve renewed four times in a row, encouraging them to shop around

This is to make sure you’re treated fairly. It’s in your best interests to see if you can get a better deal elsewhere.

In 2020, almost 7.6 million [2] drivers allowed their car insurance to auto-renew, which means that UK car owners missed out on a collective saving of £2.1 billion.^[1]

Are auto-renewals more expensive than switching?

They can be. Many customers have found that the price of their policy increases year on year despite there being no adjustments, such as a change of car or address, or claims made in the previous year.

Previously, insurers were allowed to increase premiums each year for existing customers while offering new, equivalent, customers better discounts and deals, to attract new business.

But this ‘loyalty penalty’ was disallowed from January 2022, when the Financial Conduct Authority (FCA) brought in new regulations to make insurance pricing fairer across the board.

The new rules state that renewal quotes for current motor insurance customers shouldn’t be more expensive than they would be for new customers.

However, it’s still worth shopping around when you receive your auto-renewal quote for car insurance as there could be better deals out there for you.

The real cost of sticking with your insurer

Motorists stick with their current insurer at auto-renewal for lots of reasons.

According to our research [1], 27% of drivers assumed they’d get a good deal again because their provider was the cheapest last year.

Other reasons for sticking with the same provider included concerns over the hassle of switching (19%).

Plus, 22% of drivers stayed put because they paid monthly and didn't want the fuss of rearranging their Direct Debit.

We also asked drivers how they dealt with the renewal information they received from providers.

Surprisingly, 49% said they compared their renewal premium with what they paid the previous year. Just over a third check their renewal papers for any changes to the cover, while only 29% thought about the cover they'd need for the coming year.

Not checking the full terms and conditions of a renewal could become an issue if you try to make a claim on something like windscreen protection and find you’re not covered anymore.

How to stop your insurance auto-renewing

If you think your auto-renewal quote is too expensive, it pays to shop around – you can use us to compare prices. If you find a better deal, make sure you cancel your auto-renewal in plenty of time, so you don’t get charged for two separate policies.

Alternatively, if you’d rather stick with your existing insurer, get in touch and see if you can negotiate a better price. Explain that you’re a loyal customer and see what they can do for you.

If they won’t budge on price, and you can find a better deal elsewhere, tell your current insurer to cancel your auto-renewal.

Most importantly though, make sure you always have valid insurance in place and the right amount of cover for you and your vehicle.

Can I cancel if my policy has already auto-renewed?

If your policy has already auto-renewed, but you decide you want to go with a different provider, you’re free to cancel without a financial penalty during the 14-day cooling-off period.

If it has been longer than this, you’ll likely be charged for the amount of time the policy was running before you cancelled, and you may also need to pay an administration fee.

How can I cut the cost of my car insurance renewal?

• Compare prices - It’s the best way to save money and find the best deal for you and your circumstances
• Pay annually - If you can afford to pay for the whole year, rather than in monthly instalments, you could save money as you won’t be charged any interest on the premium
• Increase your voluntary excess - As long as you’d be able to afford the amount you’d need to pay in the event of a claim, increasing your excess can make your annual premium cheaper.
• Add named drivers - Adding an experienced driver to your policy could reduce insurance costs
• Black box insurance – A telematics policy, which monitors how well you drive, could result in cheaper premiums in the future
• Review add-ons – You may not need things like breakdown cover if it’s already included with your packaged bank account, for example