Insurance
The £565m cost of renewing your car insurance
Millions of drivers are paying an average of £40 a year more than they should be, simply as a result of renewing their car insurance policy with their existing insurer rather than shopping around.
That’s the conclusion of TotallyMoney, which warned that drivers are throwing away a massive £565m each year through being loyal to their current insurance provider. The firm admitted that it’s understandable why drivers opt to renew, as it’s generally pretty straightforward and the idea of sticking with what you know can be a compelling one.
However, there’s no avoiding that this sense of loyalty comes with a hefty price tag, as insurers attract new customers with their best possible prices while raising premiums for existing customers.
TotallyMoney welcomed the fact that changes from the Financial Conduct Authority will put an end to this apparent ‘loyalty charge’ but cautioned that as there is no set date for when the new rules will come into force, it’s up to individual drivers to make sure they do not overpay.
New data from the Association of British Insurers suggests that the price paid by drivers for their car insurance in 2020 was at a four-year low, with an average price of £465 for comprehensive cover. That’s down by 1% on 2019 and the lowest seen since 2016.
However, it’s worth noting that prices had started to escalate with the average premium paid in the final quarter reaching £468, up by 2% on the previous quarter.
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A separate study from consumer champions Which? found that just one in five stay-at-home drivers had seen some of their premium refunded.
Alastair Douglas, CEO at TotallyMoney, commented: “With customers being punished for their loyalty, and a car being an essential item for many across the UK, the car insurance industry can be seen as unfair. Millions of pounds are lost every year because of this, money that could be kept in customers’ pockets and better spent on other essential items.
“Customers should be aware that their best deal is not always with their current provider, in fact it rarely is, and they should shop around before renewing their policy.”