If you leave your motor insurance policy to auto-renew every year, then it could be costing you much more than it needs to!
According to research, it seems many of us are allowing our policies to auto-renew every year! This is often a tempting option, as it’s easy and avoids us having to shop around, but it could actually be costing us hundreds of pounds every year!
When buying motor insurance, it’s important that you examine your policy and look at what you need, versus what you are actually paying for. It could be that you are paying for extra cover that has no benefit to you and this could be really bumping up the price.
From 1st April, the Financial Contact Authority (FCA) will be introducing new regulations designed to encourage people to shop around for their insurance policies. It will also state that anyone selling general insurance policies, must show the cost of the current premium alongside the new insurance premium quote, on the renewal correspondence. This will make the cost difference much clearer, encouraging customers to shop around.
Motorists who have auto-renewed for at least four consecutive years will be given additional information on how to compare deals.
These rules will apply to anyone selling general insurance but also to banks, brokers and any high street retailers such as Sainsbury’s and M & S.
James Bridge, assistant director at the Association of British Insurers (ABI), says the changes should encourage more people to shop around but warns that getting cheap cover is not everything: “Always remember to choose the cover that meets your needs, and do not simply buy on price alone.”
The first thing to do is get in touch with your existing insurer and confirm all of your details are still accurate and relevant. If you now do less mileage or have changed jobs, then update this information as you may get a more competitive price.
When comparing policies, make sure you are comparing like with like and understand all charges, penalties, exclusions and conditions that you may be required to meet. Paying annually is often cheaper too, as many insurers add interest if you spread the cost with monthly payments instead. Increasing your voluntary excess, building a no-claims discount, and avoiding add-ons can also cut premiums.
However, new figures suggest that millions of drivers will continue to auto-renew their motor insurance, even though switching could save them up to £275 each. And more than eight million drivers will collectively overspend £2.37 billion on insurance premiums this year as a result, according to research from MoneySupermarket.com.
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