We all know that to drive a car on the road you need adequate insurance. But are you one of those drivers who leaves their renewal to the last minute?
Well, don’t. A new study has shown that the point when you buy car insurance has a big impact on the premium you’ll be charged.
Leave your renewal until the day before your existing policy runs out and you could be quoted nearly 30% more for the next year’s cover. But get organised and pay for your insurance early and you could be in for some decent savings.
New analysis by consumer researchers NimbleFins showed that you can save 30% or more on your car insurance just by buying your policy with a start date three weeks away from the renewal date.
They analysed more than 200 Ford Fiesta car insurance quotes for a sample 45-year-old driver with a range of start dates from ‘today’ to ‘three weeks from now’, taking the average of the cheapest ten policies for each time window, and found that some insurers charge more than £1,000 extra for a last-minute purchase with an immediate start date.
Buying your renewal even one day in advance could save you at least 17% compared with asking for an immediate start.
“Insurers are cautious of buyers who leave things to the last minute,” says Erin Yurday, NimbleFins’ CEO.
“Thus, buying insurance with a forward-dated start date can save a driver between 17% to 29% – or sometimes even more. The sample driver in the study could save £262 on average by purchasing their policy three weeks in advance of the coverage start date.”
|Policy start date||Annual premium||Number of quotes|
|1 week away||£682||45|
|2 weeks away||£652||46|
|3 weeks away||£640||46|
As well as paying a lower price, there’s more selection when looking for a car insurance policy well in advance. The study found 46 quotes for a start date three weeks away, but only 23 offers with an immediate start.
Why there is such a big difference in price, just for getting in early, is difficult to explain. Car insurance policies are largely based on an insurer’s past claims experience with a certain driver, their history and their habits.
“Perhaps those who buy car insurance at the last minute tend to submit claims more often,” says Yurday. “Maybe car insurance companies prefer a more organised client who doesn’t leave decisions until the last minute.
“Or it could be that drivers needing insurance immediately take less time to shop around, and are therefore more likely to take a higher price – in this case, car insurance companies can get away with pricing plans a bit higher.”