Car insurance money saving tips
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Allowing your insurer to auto-renew your car insurance could mean you’re missing out on a better deal elsewhere.
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.
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.
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:
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]
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.
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.
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.
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.
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[1]On 8 February 2021, an online survey of 2,042 randomly selected Great British adults was executed by Maru/Blue. For comparison purposes, a probability sample of this size has an estimated margin of error (which measures sampling variability) of +/- 2.1%. The results have been weighted by age, gender, region and social grade to match the population, according to Census data. This is to ensure the sample is representative of the entire adult population of Great Britain. Discrepancies in or between totals are due to rounding.
[2]Department for Transport’s Vehicle Licensing Statistics for Quarter 4 2020 (published December 2020) report that there were 31.869m cars licenced for use on the roads in Great Britain. 24% of motorists auto-renewed their car insurance policy at the last renewal without checking prices. 24% of 31.869m = 7,648,560.
7,648,560 x GoCompare Car Insurance’s average shop around saving of £277.17 = £2.1bn.