The world changed in 2020 and car insurance changed with it. Here’s how to keep getting the best car insurance deals, whether your driving habits are back to normal or not.
The world's beginning to open up again. You might be returning to your old commute, or finding working from home’s your permanent new normal.
But some post-Covid changes are here to stay – including how we insure our cars.
With so many of us now having drastically altered driving habits, the car insurance industry has responded.
Here’s what you need to know to make the most of it…
Less miles in 2021? Time to check you've got the right cover
One of the more innovative solutions to many people’s unpredictable or reduced mileage has been pay as you go car insurance.
Pay as you drive policies work by charging you a basic premium, then add a few pence for every mile driven. You’ll pay that off after monthly statements.
In March the RAC launched Pay by Mile, its first pay-as-you-drive product, while established PAYG insurer By Miles has already seen unprecedented rising demand.
By the end of 2020, it had sold 55% more policies than it did in the whole of 2019, with sales peaking last April as the lockdown bit and commuters realised their cars might not move off the drive much for quite some time.
“Our policy has really grown in popularity since drivers became more aware of how much they were overpaying for car insurance while their cars were sitting parked during lockdown. With pay-by mile you pay an upfront cost to cover your car while it’s parked, then you just pay for the miles you’ve driven each month.
"If you drive under 7,000 miles a year (about 150 miles a week), or you mostly use the car for regular short trips or at weekends, pay-by-mile could offer you the chance to cut your bills. The savings happen automatically, without you having to lift a finger.
“The less time your car spends on the road, the less likely you are to be involved in an accident.”
James Blackham, CEO of By Miles
The trend’s not losing momentum either. In the first quarter of 2021, By Miles has already sold half the number of policies they did for the whole of 2020.
Younger, low-mileage drivers might typically see the biggest savings. For example, RAC found that a 25 year old living in Milton Keynes covering 2,302 miles a year in a Vauxhall Corsa could save £285.85 a year by choosing RAC pay by Mile over it's standard car insurance.
Pay as you go policies won’t be right for everyone, but if you’ve felt put-out for paying for mileage you didn’t use due to lockdowns, it’s definitely worth getting a quote as well as comparing traditional car insurance, short-term and black box policies.
Right at the start of the pandemic, the Association of British Insurers (ABI) published a pledge by its members to treat customers fairly.
For motorists it meant they didn’t need to report increased mileage to their insurer because of having to drive to work instead of using public transport, or delivering supplies and medicine in their community.
Insurers are continuing to support customers affected by Covid, but the ABI’s stance has shifted slightly as restrictions ease.
“As restrictions change and travel to workplaces becomes more routine, it will again become necessary for drivers to check their insurance cover is appropriate for their needs,” it warns.
“You will need to speak with your insurer if there are ongoing changes to your working and driving activities since taking out the policy. This includes using your own vehicle to commute to work or driving to different locations for work purposes.”
In practice, this means you need to think about whether any changes to your driving habits have become more permanent. If so, you need to check your annual mileage is still accurate.
If you started to drive to work during the pandemic and have decided to stick to that instead of the train from now on, you need to check your annual mileage is high enough.
If, on the other hand, you’ll carry on working from home either full or part time from now on, you can reduce your mileage. It’s likely to save you some money too.
When you compare car insurance, consider whether your mileage has changed. For example, are you driving less because you're not regularly commuting? Or maybe you have a UK holiday booked this year, so you'll need to factor in those extra miles."
Last September the Financial Conduct Authority (FCA) published its final report on insurance pricing practices and its findings were damning.
It condemned ‘price walking’, where loyal customers had their premiums subtly nudged higher at each renewal. It meant they ended up paying significantly more than new customers.
We’ve always urged our customers to get new quotes each year instead of auto-renewing so we welcome the FCA’s move to ban price walking.
But does this mean the end of comparing car insurance each year? Sorry, afraid not.
Firstly, price walking hasn’t actually been banned yet and we’re not sure when it’ll happen. It’s likely to be by September 2021.
Secondly, no one knows how this seismic change will affect car insurance prices for everyone. Will loyal customers see their premiums reduce? Or will new customers be charged more to make up the shortfall that banning price walking will cause?
We’d urge you to keep comparing at every renewal to make sure you always find the best deal. Just because your provider gave you a great deal last year, doesn’t mean they’ll always be the cheapest for you.