Price comparison website gocompare.com has done some number crunching and reckons drivers are throwing away around £2 billion each year by failing to shop around at renewal time.
That’s because many car owners stick with the same insurer, assuming that a low premium last time means a low premium this time too. According to GoCompare, 8.8 million drivers rolled-over their last car insurance renewal without checking for cheaper premiums, missing out on typical savings of around £240 each.
8.8 million drivers rolled-over their last car insurance renewal without checking for cheaper premiums, missing out on typical savings of around £240 each.
The survey found that 31% of drivers have stayed with the same insurer for three years or more and nearly half (46%) of the 8.8m drivers who allowed their cover to automatically renew did so in the belief that because their insurer was cheapest last time they were bound to be good value this time around too.
Other reasons why drivers auto renew their policies include:
- Loyalty to an insurer which has ‘always looked after them'- 26%
- Too much hassle, even if they can save money - 18%
- They find car insurance confusing and lack the confidence to switch - 6%
- Worried that they will lose their no claims discount - 6%
Of the 66% of drivers who didn't allow their car insurance to roll-over at their last renewal, 52% wanted to find cheaper cover and save money and 40% didn't trust their insurer to give them the best deal year after year. 28% believe they get a better deal as a new customer.
GoCompare’s Lee Griffin commented: "Millions of drivers are potentially overpaying for their car insurance in the mistaken belief that an insurer offering the cheapest premium one year is bound to offer the same good value the next.
“However, many drivers have found that insurers often offer the sweetest deals to new customers whilst pushing up premiums for their existing customers. Switched on motorists know that when it comes to car insurance, loyalty seldom pays.
Insurers typically send out renewal notices two to three weeks before a policy is due to come to an end and you should use this time to shop around to see if you can get a better deal. Many insurers will automatically renew your insurance unless you contact them to tell them otherwise and their letter will focus on the convenience of needing to do nothing at all in order for your insurance to continue.
That’s convenient if you're happy to proceed without first checking if your new premium is still competitive. Insurers review their pricing regularly for different risks so there's no such thing as a ‘best buy' car insurance policy which will be the best value year after year.
If you do decide to switch insurers to save money, don't forget to contact your old insurer in good time to advise them that you wish to cancel your policy when it expires. If you don't get in touch they may renew your policy using an existing direct debit and you could face a cancellation charge when you realise you've got two policies in force.