Drivers’ £800m insurance rip-off
AUTO-RENEWAL PUNISHES CUSTOMERS WHO DON’T SHOP AROUND FOR BETTER DEALS
BRITAIN’S car drivers are being charged up to £800million too much for their insurance renewals.
They are being punished by their insurers for remaining loyal to one company.
Research reveals that at their last renewal 15% of drivers allowed their cover to automatically roll over for another year, without checking whether the price they were offered was competitive.
Forty-three per cent renewed their insurance with the same provider, but only after checking other quotes. Just 39% switched firms, according to the survey for GoCompare Car Insurance.
While auto-renewal has gone on for years – causing one insurance boss to recently refer to the market as “dysfunctional” – it is under scrutiny because of new Financial Conduct Authority guidelines which require insurers to include last year’s premium in renewal letters. Insurers have to tell customers how much they are putting up their premiums, but they are still “reassuring” them they don’t need to do anything for their insurance to continue.
While many people are wise to the practice – 58% of drivers say they know insurers save their best prices for new customers – millions are still being lulled into bad deals by the convenience of having to do absolutely nothing to remain covered.
Just over a third of Brits (35%) auto-renewed because the renewal price wasn’t hugely different to the previous year’s premium.
Other reasons for sticking with the same provider included: loyalty (21%); having a good experience with a claim (9%); and not feeling confident enough to switch because they find buying car insurance too confusing (7%).
The main reason given for switching insurers was an increase in the renewal price (71%). Top tips to get the best insurance deals:
1. Put your renewal date in your diary to give yourself time to shop around.
2. Never accept your renewal quote without first checking the new price you are being offered is competitive.
3. Compare prices and make sure you are making a like-for-like comparison. Understand all the charges, any penalties, exclusions and terms and conditions.
■ CRUNCH: Many drivers don’t bother to switch insurers