Auto-Renew & Waste £267 A Year By Ticking The Box : Car Insurance

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Drivers are paying £267 a year too much for their car insurance by letting their policy renew automatically for the following year.

Data from comparison website GoCompare shows that motorists are collectively paying £800m a year too much in premiums by failing to shop around. Its research showed that just 39pc of drivers switched insurer when it came to renewing.

As Telegraph Money has previously reported, many insurance companies raise premiums after the first year and rely on policyholders’ apathy to allow the policy to auto-renew regardless of the cost.

GoCompare also warned that new rules from the City regulator to help combat this problem were not working effectively. Car insurers now have to tell customers how much they paid for the previous year’s insurance in their renewal letters. But the comparison service said this information was being buried.

Georgie Frost of GoCompare said: “Insurers aren’t effectively communicating all the options open to people at renewal. We’d like to see insurers make sure that important information is prominently displayed, so that policyholders are actively and effectively encouraged to shop around every year.

“At the moment, insurers can – and do – still give more prominence to messages that encourage people to do nothing, despite their premiums going up.”

Speaking on the It’s Your Money podcast, consumer affairs specialist James Daley of Fairer Finance said it was possible to find companies that won’t increase prices after the first year.

“There is a bit of a backlash these days and there are some insurers that are starting to reward loyalty and make a virtue of not ripping their customers off,” he said.

“Maybe customers should look for an insurer that is more expensive in year one but has good reviews and is less likely to push through a price increase in the following years. Broadly speaking, those insurers that offer ‘too good to be true’ prices in year one are pushing through the biggest price increases in year two.”

However, he said it was hard to pinpoint the companies that rewarded loyalty. He said mutual organisations such as NFU, LV=, Ecclesiastical and John Lewis often come out best.

“Some brands that are higher end, more niche, not as well known, are not in the business of pushing through 10pc or 20pc price increases in year two,” he added.

Source: http://www.telegraph.co.uk