Two-thirds of drivers in Britain automatically renew their car insurance and a large proportion do so without even checking they are getting a good deal, which could be costing motorists up to £1.3 billion a year at renewal time.
A study by GoCompare on the eve of the release of the new 18 registration plate, found that only 38% of motorists take the time to check the previous year’s premium to see how it has changed. The auto-renewal study revealed that 15% of drivers let their insurance continue with the same provider for another year without checking whether they are getting a good deal.
When asked why they had auto-renewed their cover, 24% had done so out of loyalty to their insurer while 11% confessed they’d done so because they find car insurance confusing and didn’t feel confident enough to switch providers.
Other reasons for sticking with the same insurer included a good experience with a past claim (9%), the expectation that because the current insurer was competitive last year they would offer a competitive renewal price (9%).
Drivers are more loyal than insurance companies deserve
The average length of time drivers stay loyal to the same provider is 3.2 years; over a fifth (21%) have been with the same insurer for more than three years, while 15% have stayed loyal for over 4 years.
The study also found that the main reason people switched at renewal was a premium increase (70%), while 42% said they always shop around. The main explanation giving for staying with the same insurer was that the hassle of switching would be outweighed by the savings for changing provider.
Drivers were also asked what action they take when they receive their insurance renewal notification. Only 38% open and deal with it immediately, fewer still (10%) read it thoroughly while 22% merely skim read the renewal letter.
Just 38% take the time to check the previous year’s premium to see how it has changed and only 18% check their renewal offer for changes to the cover provided.
Matt Oliver from GoCompare car insurance commented: “When policies come up for annual renewal, insurers offer to continue your cover without you needing to take any action. While this approach helps ensure you don’t inadvertently allow your insurance cover to expire, auto renewing customers can pay a hefty price for the convenience.
“Insurers typically use their most competitive offers to attract new customers and rely on existing customers’ apathy to charge higher renewal prices. Customers switching could save up to £279.42, which goes to demonstrate that when it comes to car insurance, loyalty doesn’t pay.”
Matt Oliver continued: “A simple way to beat rising premiums is to act as soon as you receive your insurance renewal letter rather than leaving it to the last minute. If you delay renewing your cover until the eleventh hour, you’ll limit your choices and reduce the amount you could have saved by switching sooner.”
Top tips from GoCompare to get the best car insurance deals:
- Never accept your renewal quote without first checking that the price you are offered is competitive – even if your insurer was the cheapest last year.
- Give yourself time to review your cover – note the renewal date in your diary and shop around at least a week before your policy renews to get the best deal.
- Compare prices and check the small print. Make sure you’re making like-for-like comparisons and understand all the charges, any penalties, exclusions and terms and conditions you will be required to meet.