March heralds the release of the first of the year’s two vehicle registration plates, making it one of the busiest periods for car insurance renewals. But, despite insurance premiums reaching record levels in the last year, new research highlights that drivers are wasting an estimated £1.3bn by allowing their cover to automatically renew without checking to see if they could get the same cover for less money.
GoCompares Car Insurance’s Auto-Renewal Study revealed that 15% of drivers fall for the insurance renewal trap, letting 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%).
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 3 years, while 15% have stayed loyal for over 4 years.
The Car Insurance Auto-Renewal Study 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% 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.
Last year, GoCompare Car Insurance commissioned independent insurance and finance research specialist, Consumer Intelligence, to investigate whether the timing of a renewal switch affected the price offered***. Most (89%) drivers potentially benefited from renewing early. The best savings were found a week before the renewal date but, substantial savings of 11% to 12% could be made throughout the month leading up to it. However, prices started to increase on the day before the renewal date, as a result, average savings reduced to 7%, although 70% of drivers still saw a saving.
Commenting on the research findings, Matt Oliver from GoCompare Car Insurance said,
“According to the Association of British Insurers, the average car insurance premium paid rose by 9% in 2017 to a record high and, price rises are expected to continue this year. But, the good news is that price differences for the same cover can vary widely between insurers, so savings can be made by simply shopping around.
“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 and saving with GoCompare could save up to £279.42**** – which goes to demonstrate – 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.
Visit GoCompare for more information on switching your car insurance: http://www.gocompare.com/car-insurance/