Ahead of one of the busiest months for car insurance renewals, GoCompare Car Insurance revealed millions of motorists are overpaying to the tune of £982m a year for their car cover by allowing their insurer to automatically renew their policy.
At their last renewal, 4.1 million drivers rolled-over their insurance without checking to see if they could get the same cover for a cheaper premium – each missing out on a potential saving of up to £239.69.
The new car sales peak in September meaning millions of drivers will be renewing insurance this month. GoCompare Car Insurance’s Auto-Renewal Study found that, at their last renewal, 44% of drivers allowed their insurance to automatically roll-over, 13% doing so without checking to see if they could get a better deal.
Drivers’ main reason for renewing automatically (22%) was the assumption insurers offered the cheapest premium the previous year, so they would continue to offer good value this time around, followed by switching is too much hassle (21%), loyalty to their insurer (19%) and lack of confidence to switch (10%). Other reasons included not dealing with the hassle of canceling a monthly direct debit (10%), as well as finding the thought of switching insurer difficult (7%).
The research also reveals that how motorists paid for their insurance cover had a bearing on how likely they are to shop around at renewal. Drivers who pay for their insurance monthly rather than annually are 55% more likely to allow their policy to automatically renew.
Nearly a third (31%) of motorists pay for their insurance in monthly installments, but drivers from the lowest earnings groups are 36% more likely to be monthly payers. While monthly payments allow customers to spread the cost of cover, insurers typically impose fees and interest charges which ultimately make this is the most expensive way to buy insurance. Therefore, it is often those who can least afford it, who end up paying more.
The Auto-Renewal research also found that only 37% of drivers look at what they paid for their insurance last year to see how it compares with the renewal offer, fewer still (20%) read through their renewal information to check for any changes to the cover offered.
When asked about changes to excess amounts, the research revealed respondents who admitted to having no idea whether their compulsory excess had increased or not are 26% more likely to let their car insurance automatically renew, with 7% admitting they don’t know what a compulsory excess is.