Car Insurance Auto-Renewal Could Cost You Up To £237

Save money on car insuranceAre you one of the 30% of drivers who auto-renewed their last car insurance policy?

Direct debits and recurring credit card payments make it easy to do, and most car insurance companies go out of their way to make it easy to auto-renew, because it’s highly profitable for them.

Sadly, auto-renewal is not such a good idea for you, the humble driver.

According to new research by Gocompare.com, the 8.5 million drivers who auto-renewed their car insurance last year may have paid up to £237* more than they neeeded to for their motor insurance.

Gocompare found that 37% of drivers have been with the same insurer for at least 3 years, while 18% have stayed loyal for five years or more. Just two-thirds of drivers shopped around for a better deal at renewal time, with the remaining 30% simply accepting their renewal quote without question.

Of the UK drivers who rolled-over their car insurance policy at their last renewal:

  • 37% believed that because their insurer was cheapest last year they would offer good value again this year
  • 26% auto-renewed out of loyalty to the insurer
  • 22% didn’t want to change their direct debit
  • 15% said they had stuck with the same insurer because they thought that it was too much hassle to get new quotes

Although loyalty is a nice idea, and it certainly makes life easier, it just isn’t how things work these days. In my experience, even if you want to stay with the same company, there’s usually a better deal to be done if you find a better quote elsewhere and then phone up your existing company and ask them to match it.

Scott Kelly, head of car insurance at Gocompare.com, commented:

“Over the last year we’ve seen some major changes taking place in the insurance market, including gender-neutral pricing and changes in the law restricting the activities of claims management firms, which have resulted in a fall in car insurance premiums. So whether you’re switching cars this September or not, it may be a good time to consider switching your insurer, because shopping around is the easiest way to make savings on your car insurance costs.

This also works in other areas: for example, every year for the last three years, I’ve phoned up the AA and go them to match my renewal quote to the cost of a new customer quote from either themselves or one of their competitors. It’s a chore, but it saves me £30-£50 per year.

I’ve had similar success with car insurance in the past, as well, so I’d recommend trying to haggle, even if you don’t want to change insurer. Trust me — your insurance company will have staff trained in ‘customer retention’ and will often be happy to offer you a discount to keep you, because keeping an existing customer is cheaper than acquiring a new customer.

*51% of consumers could achieve this saving with Gocompare.com car insurance,  based on independent research by Consumer Intelligence during 01 July 3012 to 31 July 2013.

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