Nearly three million more drivers have had their auto insurance automatically renewed so far this year compared to the same point in 2020 – a trend that’s up 60 percent, new research shows.
A total of 7.6 million drivers have so far paid a ‘loyalty tax’ to their insurer so far this year for automatically renewing their policy, without looking to buy identical coverage for less, according to data from Go Compare.
This has jointly cost drivers £ 2.1 billion, the comparison website estimates.
Growing trend: so far, nearly 3 million drivers have automatically renewed their car insurance this year
To avoid this, drivers are encouraged to shop around for the best insurance deals, rather than having their plan renew automatically.
They then have the choice of switching to a new company, or using that quote as an arsenal to lower the price of their policy with their existing one.
Research conducted in February 2020 found that 15 percent of drivers had been automatically renewed without first checking other quotes.
In February, the figure had risen to 24 percent, representing 2.9 million more policies auto-renewing so far this year.
This has increased the number of automatic renewals by about 60 percent.
As such, those who automatically renew their insurance without checking prices can run up to £ 277 each out of pocket.
When asked why they had their auto insurance renewed automatically, 27 percent thought that because their insurer was the cheapest last year, they would be good value this time too.
Another 22 percent remained loyal because they paid their premiums in monthly installments and didn’t want to hassle with rearranging their direct debit.
However, interest is usually added to the monthly premiums, so drivers who pay in installments pay more than those who make a one-time payment.
About 23 percent said they stayed with the same provider because of loyalty, while 19 percent said they were concerned about the hassle.
Another 19 percent said they were concerned about the ease of switching, while 12 percent were worried about losing their no-claim bonus.
The survey found that drivers stayed with the same provider for an average of two years and eight months, while 15 percent had not changed providers for five years or more.
Motorists were also asked for their opinion on the renewal process and the information they received from insurers.
Despite recent changes to make renewal letters more accessible and comprehensive, many drivers find renewal information difficult to understand.
Those who automatically renew their insurance can run up to £ 277 each out of pocket
Only 23 percent of drivers said they had read their renewal information thoroughly.
About 49 percent compare their renewal premium to what they paid the previous year, 37 percent go through their renewal papers for any changes to the coverage they got, while only 29 percent considered the level of coverage they needed for the year ahead.
A third of drivers said communication about renewal should be made clearer, with 45 percent asking for standard wording to make renewal letters easier to understand.
A quarter would like to see more reminders to shop around on renewal, while 29 percent would like more renewal so they have more options to switch.
Lee Griffin, CEO of GoCompare, said: “March, with the release of the first license plate of the year, has been historically one of the busiest months for policy changes.
‘But our research shows that millions of drivers are not actively engaged in the renewal process, potentially leaving hundreds of pounds out of their own pocket.
After living under the Covid-19 restrictions for nearly a year, the economy has suffered, leaving millions of people with lower incomes.
Insurers help people in extreme financial difficulties by deferring payment, and in these circumstances it may be in the best interest of the insured to stay with their current provider.
However, it’s common knowledge that unlike most companies that offer loyalty rewards and discounts for ongoing use, insurers typically book their best deals to attract new customers. Drivers who are still paying their premium should therefore really shop around, especially if they have been working for the same provider for a while. ‘
How to Get the Best Car Insurance
GoCompare has provided drivers with some tips on how to get the best car insurance:
1. Never accept your renewal quote without first checking that the price you are being offered is competitive, even if your insurer was the cheapest last year.
2. Give yourself time to review your cover. Make a note of the renewal date on your calendar and go around at least a week before your policy renews to get the best deal.
Compare prices and check the fine print. Make sure you make similar comparisons and understand all costs, fines, exclusions and conditions that you must comply with.
4. Use a comparison website, which provides fast and up-to-date information on a wide variety of financial products and services.
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