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Auto-renewal trap could cost 5.7m motorists up to £1.27bn a year*

23 February 2015

As peak insurance renewal season approaches – research reveals that 19% of drivers allow their car insurance to auto-renew without checking other quotes

  • A quarter of drivers have been with the same insurer for three years or more
  • Only 43% bother to check last year’s premium to see how it has changed;
  • A third of young drivers let their car insurance auto-renew without shopping around for a better deal.

March is traditionally one of the busiest months for car insurance renewals due to the high volume of new car sales. However, the new survey shows that many drivers are likely to fall in the auto-renewal trap.  Nearly a fifth (19%) say they allowed their car insurer to automatically roll-over their policy for another year at their last renewal – without checking whether they were being offered a good deal.

Young motorists (aged 18 to 24) – who potentially have the most to save - were the most apathetic.  A third of those surveyed admitted to leaving their insurance to roll-over without checking other quotes, while 61% said that they auto-renewed because shopping around was ‘too much hassle – even if I could save money’.

The survey also revealed that men are more laid back in their approach to renewing their car insurance than women.  Just over a fifth (21%) auto-renewed without checking other quotes (women:18%) and twice as many men (22%) than women (10%) had allowed their policy to auto-renew simply because they couldn’t be bothered to get other quotes, despite knowing it could save their hard-earned cash.

When asked why they allowed their car insurance to renew automatically 36% 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 (19%), a good experience with a past claim (15%) while 7% said that they weren’t confident enough to switch, finding car insurance too confusing.

The survey also questioned drivers about the renewal information they receive from providers, revealing that many drivers find renewal letters tricky to understand and lacking key information:

  • 31% said that insurance renewal packs should be easier to understand;
  • 44% want insurers to make it clearer how much their renewal has increased by compared with last year;
  • 37% don’t know exactly how much they paid for their insurance last year;
  • Only 43% check last year’s premium to see how it has changed;
  • Fewer than a third (30%) check their renewal documents for any changes to the cover provided;
  • 28% of those surveyed said that they felt under pressure to renew with their existing provider;
  • 28% said that insurance companies use underhand tactics to get you to renew with them.

When specifically told that their policy will be automatically renewed but some elements of cover are changing 17% ignore it and assume nothing very important will have changed.

Matt Oliver, from Gocompare.com Car Insurance, commented: “New registration plates are issued in March, making it the busiest month for car insurance quotes and renewals.  The car insurance market is fiercely competitive and insurers often offer better deals to new customers than for those renewing existing policies.

“So, our advice is simple – even if your current insurer offered the best deal last year, you shouldn’t automatically assume that they will when your policy comes up for renewal.  Use your renewal letter as a prompt to take action.  Look at your renewal notice as soon as it arrives.  Compare the price and cover against last year’s documents, consider any changes you might need to make to the cover and take a look at similar policies on a comparison site to see if you can make any savings.        

“It only takes about five minutes to compare over 120 car insurance brands on Gocompare.com and 51% of customers using our site could save up to £223 – making that five minutes time well spent**.  A couple of hundred quid saved on your insurance goes a long way towards paying for other motoring costs, for example car tax, servicing and fuel.”

Matt Oliver concluded: “If you decide to switch, don’t forget to notify your current provider.  Most policies automatically renew, unless you tell the insurer otherwise within the 14 day cooling off period.  Miss the cut-off date and you could face hefty cancellation charges.”

For more information, Gocompare.com has a guide to auto renewals on their website.

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Notes to editors

*According to the RAC report on motoring, in 2013 there were 30m drivers in the UK. We have assumed that 19% of motorists auto-renewed their car insurance policy at the last renewal is representative of the RAC’s 30 million drivers. 19% of 30,000,000 = 5,700,000 (5.7m).

**Based on independent research by Consumer Intelligence during 01 December 2014 to 31 December 2014. 51% of consumers could achieve a saving of up to £223.16 with Gocompare.com car insurance based on a comparison of at least 39 companies.