Lazy drivers are paying through their noses for car insurance during lockdown.
GoCompare Car Insurance has reminded drivers of the need to shop around for the best insurance deals as new research reveals a sharp increase in number of policies being automatically renewed in the last 12 months.
The website, found that 7.6m motorists paid a ‘loyalty tax’ to their insurer for allowing their policy to automatically renew, without seeing if they could buy identical cover for less and auto-renewal could be costing UK drivers £2.1bn.
Commissioned nearly a year after the UK went into its first National lockdown, the research revealed that the number of automatic renewals had soared by 60%.
Similar research commissioned February 2020 found that 15% of drivers had auto-renewed without first checking other quotes.
By this February, the figure had risen to 24%. That equates to 2.9 million more policies being auto-renewed.
A mother of two in West Wales challenged her motor insurer over a rise of £130 on her premium.
She found a rival could nearly match the new price but when she confronted her existing provider and said there had been a lower quote they immediately slashed the increase to just a few pounds and the agent admitted this was a common occurrence.
When asked why they allowed their car insurance to automatically renew 27% thought that because their insurer was the cheapest last year, they would be good value this time around too.
Just over a fifth (22%) had stayed loyal because they paid their premiums in monthly instalments and didn’t want the hassle of rearranging their direct debit. This is particularly concerning because interest is added to monthly premiums so, drivers paying by instalments always pay more than those who make a single payment.
Other reasons for sticking with the same provider included loyalty (23%), concern over the hassle and ease of switching (19%), worries over the loss of their no-claims bonus (12%).
The research also looked at the length of time drivers had been with the same insurer. On average, drivers have stayed with the same provider for 2.8 years, while 15% hadn’t changed providers for 5 years or more.
Motorists were also asked for their views on the renewal process and the information they received from insurers. Despite recent changes aimed at making renewal letters more accessible and comprehensive, many drivers find renewal information difficult to understand.
- NEVER accept your renewal quote without first checking that the price you are offered is competitive, even if your insurer was the cheapest last year.
- Give yourself time to review your cover – note the renewal date in your diary and shop around at least a week before your policy renews to get the best deal.
- Compare prices AND check the small print. Make sure you make like-for-like comparisons and understand all the charges, any penalties, exclusions and terms and conditions you will be required to meet.
- Use a comparison website, they provide quick and up-to-date information on a wide range of financial products and services.
Only 23% of drivers said they thoroughly read their renewal information. Less than half (49%) check their renewal premium against what they paid for cover the previous year, 37% go through their renewal papers for any changes to the cover they were being offered, while only 29% considered the level of cover they needed for the year ahead.
A third of motorists said that renewal communications should be made clearer, with 45% calling for standard wordings to make renewal letters easier to understand. A quarter would like to see more reminders to shop around at renewal, while 29% would like more the renewal period extended to give them more opportunity to switch.
Lee Griffin, CEO and founder of GoCompare, commented, “March, with the release of the first numberplate of the year, is historically one of the busiest months for policy renewals. But our research highlights that millions of motorists are not actively engaging with the renewal process – potentially leaving themselves hundreds of pounds out of pocket.