- Don’t auto-renew your car insurance!
- Auto-renewing could cost you
- Is pay-as-you-go car insurance a good alternative to auto-renewal
- Check your renewal notice
- Compare car insurance to save
- What can affect the cost of my car insurance premium?
- 11 top tips to save on your car insurance premium
- Frequently asked questions
Don’t auto-renew your car insurance!
Automatically renewing your car insurance may result in paying a higher premium, and here’s the reason why:
Have you observed how effortlessly you can renew your car insurance with the same company year after year? In most cases, there’s no need for any action on your part, as the insurance provider handles everything through a process known as ‘auto-renewal.’
Though this may seem convenient, it often leads to increased costs, as many car insurance companies use the renewal as an opportunity to raise your premium.
Consequently, you might find yourself paying significantly higher car insurance premiums than if you had taken the time to explore other options and compare prices from different providers. By shopping around, you increase your chances of finding more competitive rates and potentially saving money on your car insurance.
According to MoneySuperMarket data correct as of February 2019
Auto-renewing could cost you
According to findings by MoneySuperMarket, over 14 million drivers continue to let their car insurance policies automatically renew each year. Since auto-renewals often lead to yearly increases in premium rates, British motorists may be collectively overpaying by approximately £565 million.
By not comparing available options and seeking more competitive insurance quotes, drivers are potentially missing out on significant savings and better coverage options.
Is pay-as-you-go car insurance a good alternative to auto-renewal
Pay-as-you-go car insurance can be a good alternative to auto-renewal, especially if you don’t drive many miles per year. If you drive less than 6,000 miles annually, pay-as-you-go insurance may be a more cost-effective option for you.
This type of insurance charges you for each mile or hour driven, in addition to a set basic rate that covers the car against damage or theft while it’s parked. The policies are typically in the form of flexible monthly subscriptions that you can cancel at any time.
Check your renewal notice
You might want to take a closer look at your car insurance renewal notice if you’re still sceptical. By comparing last year’s payment with this year’s proposed rate, you can see the extent of any increase in your premiums.
Based on MoneySuperMarket data, auto-renewed car insurance policy premiums rose by an average of £40 last year. As a result, you could be among the 67% of people who experience a price hike if you opt for auto-renewal.
As of February 2019, the average cost of car insurance auto-renewal, according to MoneySuperMarket data, might surprise you. Since April 2017, insurers have been required to include this information on renewal notices due to new rules introduced by the Financial Conduct Authority (FCA), the insurance industry regulator. These changes aimed to reduce unnecessary spending on auto-renewals.
While less than half of British motorists noticed this information in the survey last year, the increased transparency regarding auto-renewal costs prompted over a third of respondents to search for a more affordable car insurance quote. By being aware of the potential premium increase and exploring alternative options, drivers can potentially save money and find better coverage.
Compare car insurance to save
Avoid the loyalty tax by shopping around and comparing cheap car insurance quotes; you could save up to £334*. It takes just a few minutes to assess offers from various providers, and you can organize the results by price or excess amount.
Switching car insurance providers could lead to savings of up to £334* with Comparoo.
The search results will also provide an overview of car insurance policies that include legal expenses, personal accident coverage, breakdown assistance, windscreen protection, and a courtesy car. If any additional payment is required for these features, the cost will be displayed prominently.
What can affect the cost of my car insurance premium?
There are several factors that insurance providers consider when calculating your car insurance premium. Any changes to these factors could impact the cost of your cover when you renew or switch providers. Here are some of the factors that can affect your premium:
- Your job
- Your age
- Your address
- Your annual mileage
- The make and model of your car
- The value of your car
- Any claims you’ve made in the past
- Any driving convictions or penalty points on your licence
- Your level of coverage and excess
- The type of car insurance policy you have, such as comprehensive or third-party-only coverage.
It’s important to keep these factors in mind when shopping around for car insurance, as they can affect the cost of your premium and the level of coverage you receive.
11 top tips to save on your car insurance premium
- Act quickly: Renewing your car insurance policy three weeks before it is due to end can lead to significant savings. It is recommended to act quickly and renew in advance, rather than leaving it until the last minute.
- Shop around: Compare quotes from multiple car insurance providers to find the best deal for your specific situation. Don’t just settle for the renewal price from your current insurer.
- Increase your excess: By opting for a higher voluntary excess, you can potentially lower your premium. However, make sure you can afford the excess in case you need to make a claim.
- Drive a safer, more economical car: Choose a vehicle with a smaller engine, lower horsepower, and better safety ratings. Insurers often charge lower premiums for cars that are cheaper to repair and pose a lower risk.
- Improve your car’s security: Installing approved security devices such as alarms, immobilisers, and tracking systems can lower your insurance premium, as they reduce the risk of theft.
- Limit your mileage: The fewer miles you drive, the lower your risk of being involved in an accident. By reducing your annual mileage, you may qualify for a lower premium.
- Build a no-claims bonus: A good driving record with no claims can lead to substantial discounts on your premium. Drive safely and responsibly to maintain a clean record.
- Pay annually: Paying for your car insurance in one lump sum instead of monthly installments can save you money, as insurers often charge interest on monthly payments.
- Add a named driver: Adding an experienced, low-risk driver to your policy can lower your premium. However, avoid “fronting,” which is falsely listing someone else as the main driver to save money, as this is illegal and can lead to a voided policy.
- Take a defensive driving course: Completing an approved defensive driving or advanced driving course can result in discounts on your car insurance, as insurers view this as proof of your commitment to safe driving.
- Check for discounts: Look for any available discounts, such as multi-policy, student, or military discounts, and inquire with your insurer about potential savings.
Frequently asked questions
Yes, car insurance companies are allowed to automatically renew policies, provided that they have informed the policyholder beforehand and have clearly disclosed the renewal terms, including any potential premium increases.
However, policyholders have the right to cancel or switch providers before the auto-renewal takes effect, which is why it’s important to review the renewal notice and shop around for better deals before the renewal date.
To stop your car insurance from auto-renewing, you should contact your insurance provider before the renewal date and inform them that you do not want your policy to be automatically renewed.
Make sure to review your renewal notice and take note of the deadline for cancellation. Additionally, it’s a good idea to shop around for better deals and switch providers if you find a more suitable policy. Remember to always have continuous coverage to avoid any legal issues or penalties.
Yes, you can dispute an automatic renewal if you believe that the insurance provider did not properly inform you about the renewal terms or if there were errors in the process.
Contact your insurance company to discuss your concerns and provide any evidence supporting your claim. Keep in mind, however, that you must do this promptly after receiving the renewal notice, as there might be a limited window of time to dispute the automatic renewal.
If you’re unsatisfied with the response from your insurer, consider escalating the issue to Financial Conduct Authority (FCA) or seeking legal advice.
When you turn on auto-renew for your car insurance, your policy will be automatically renewed at the end of the current term, without any need for manual intervention.
The insurance provider will notify you before the renewal date, often including details about the new premium and any changes to the policy terms. While auto-renewal offers convenience and ensures continuous coverage, it may also result in higher premiums, as insurers sometimes increase rates upon renewal.
To avoid overpaying, it’s advisable to review your renewal notice, compare quotes from other providers, and consider switching if you find a better deal.
Auto-renewal is important because it helps ensure that you have continuous car insurance coverage without the need for manual intervention or risk of policy lapses.
By opting for auto-renewal, your insurance policy will be automatically renewed at the end of the term, providing peace of mind that you are always covered while driving.
Additionally, auto-renewal helps prevent any legal or financial consequences that can arise from driving without valid insurance. However, it’s important to review the renewal notice and compare quotes from other providers to avoid potential premium increases and find the best deal for your needs.
If you decide to switch car insurance providers instead of renewing, you can usually transfer your no-claims bonus (NCB) or discount to your new policy. NCB is a reward given to drivers who have not made any claims on their insurance policy in the previous year, with discounts increasing for each claim-free year up to a maximum limit.
To transfer your NCB, you should make sure to have proof of your claim-free record, which can usually be found on your renewal or cancellation letter. If you can’t find the proof, contact your current insurance provider and ask them to send it to you.
It’s important to note that each insurance provider may have their own requirements for proof of NCB, so make sure to check with your new provider beforehand to ensure you have the correct documentation. Additionally, if you have an accident or make a claim while your NCB is being transferred, your new provider may adjust your premium accordingly.
If you renew your car insurance and then decide to cancel, you have the legal right to do so within a 14-day cooling-off period. During this time, you will be refunded the cost of your policy minus any days it was active for. However, you may also be charged an administration fee for cancelling, and the exact amount should be stated in the policy terms and conditions.
If you want to cancel your car insurance after the cooling-off period, you may still be charged a cancellation fee. This fee can vary depending on the insurance provider, but it is usually a percentage of the remaining premium or a set amount. Despite the cancellation fee, it may still be cost-effective to switch providers if you find a better price for your premium elsewhere.
It’s important to remember that cancelling your car insurance mid-term can have consequences, such as losing your no-claims bonus or facing higher premiums in the future. Therefore, it’s recommended to review your policy thoroughly and compare quotes from other providers before making a decision to renew or cancel your car insurance.