New survey suggests by doing so drivers are paying more than they might need to
According to new research, around three million motorists in the UK fork out £800million too much every year by letting their car insurance renew automatically.
Even though new rules were brought in regarding renewal letter, a number of insurance companies still tell their customers that the policy will carry on and no further action is necessary.
A staggering one in six said they let their insurance policy continue for another year without making checks to see if they could get a cheaper quote elsewhere. Only 4 out of 10 changed to another company.
According to new research, around three million motorists in the UK fork out £800million too much every year by letting their car insurance renew automatically. © Copyright JThomas and licensed for reuse under this Creative Commons Licence.
Researchers have warned that because motorists tend to automatically renew their policy, around three million motorists in the UK could be paying, as a collective, as much as £800 million too much every year.
The Financial Conduct Authority states in its guidelines that insurance companies must include last year’s premium in letters of renewal and have to inform the customer they are free to look around for better deals.
Insurers now have to inform their customers how much their policy is increasing, however they continue to ‘reassure’ them that no further action is necessary if they want their policy to continue.
According to GoCompare who carried out the study, many motorists claim to know exactly how insurance companies work. Six out of 10 said they know these companies quote their best prices for brand new customers.
However, despite these findings, millions of drivers still remain with their insurance providers for another year simply because they don’t have to do anything to stay covered.
Of the 1,400 drivers questioned as part of the survey, just one in five said they read their renewal letter properly, whilst 21% confessed to simply taking a quick look.
One third of motorists admitted to renewing automatically because the price was similar to last year’s, whilst others stayed with their provider because they find the renewal process a little confusing.
Many motorists admitted to auto-renewing simply because of loyalty, whilst others stayed because they’d made a claim in the past with the insurance providers and the experience went without a hitch.
“While auto-renewal guarantees that drivers maintain cover at all times and don’t inadvertently end up driving uninsured, insurers aren’t effectively communicating all the options open to people at renewal,” said Georgie Frost from GoCompare.
“We’d like to see insurers make sure that important information is prominently displayed, so that policyholders are actively and effectively encouraged to shop around every year,” she added.
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