Car insurance loyalty costing drivers £720 million a year
Auto-renewal policies often mean motorists aren’t getting the best deal.
Drivers allowing their car insurance to auto-renew cost them £720 million in 2020 – a seven per cent increase on 2019’s figure of £674 million.
New research by comparison site MoneySuperMarket found that 17.1 million drivers allowed their insurance to auto-renew last year. It accounts for 41 per cent of drivers, the same percentage as in 2019.
However, drivers saw their premiums rise by £42 on average, with one in five seeing jumps of between £26 and £50. One in 10 saw increases between £51 and £75, too.
Some eight per cent of drivers allowed their insurance to automatically renew without checking out cheaper deals elsewhere, with a fifth admitting that they stayed with their previous insurance provider due to ease. A tenth believed that swapping insurance providers is too much time or effort, while another tenth believed that there are no significant savings to be made by shopping around.
Rules implemented in 2017 by the Financial Conduct Authority are intended to promote motorists shopping around by highlighting a driver’s new premium price against their renewal price, alerting them to any potential increase or decrease.
However despite this, half of the drivers do not recall seeing these notifications, while of the remaining half who did see the price guides, a third said that they didn’t feel encouraged by them to shop around.
Kate Devine, car insurance expert at MoneySuperMarket, commented: “Letting your car insurance auto-renew almost always sees you end up paying more, with our research showing that the average premium increase last year was £42. While it’s great to see that many of us are shopping around for a better deal, the number of people allowing their policy to auto-renew is still high at 41 per cent.
“If your policy is coming up for renewal, you should always shop around to see what deals are on the market – a new deal on your car insurance is very easy to find online and could save you up to £218.”
The research also shows that the cost on an average premium decreased three per cent year-on-year – falling from £503 in the fourth quarter in 2019 to £490 during the same period in 2020.
