Nearly three million more drivers have allowed automatic renewal of their car insurance so far this year, compared to the same point in 2020 – a trend that has increased by 60 percent, new research shows.
A total of 7.6 million drivers have paid their insurer a ‘loyalty tax’ so far this year for allowing their policy to be renewed automatically, without seeing if they could buy identical coverage for less, according to Go data Compare.
Collectively, this cost drivers £ 2.1 billion, according to estimates from the comparison site.
Growth trend: almost 3 million more drivers have allowed their auto insurance to be renewed this year
To avoid this, drivers are encouraged to look for the best insurance offers, instead of allowing their plan to be automatically renewed.
They then have the option of moving to a new company or using that quote as an arsenal to reduce the price of their policy with the existing one.
A survey commissioned in February 2020 found that 15 percent of drivers had done the automatic renewal without first checking other quotes.
Last February, the number rose to 24 percent, which is equivalent to 2.9 million more policies being automatically renewed this year.
This means that the number of automatic renewals has increased by about 60 percent.
As such, those who allow their insurance to be renewed automatically without checking prices can each have their own pocket at up to £ 277.
When asked why they allowed their car insurance to be automatically renewed, 27% thought that because their insurance company was the cheapest one last year, they would have a good value this time too.
Another 22 percent remained faithful because they paid their premiums in monthly installments and did not want the hassle of reorganizing their direct debit.
However, interest is usually added to monthly premiums so that drivers who pay in installments pay more than those who make a single payment.
About 23 percent said they stayed with the same provider due to loyalty, while 19 percent said they were concerned about the boredom.
Another 19 percent said they were concerned about ease of exchange, while 12 percent were concerned about losing their bonus without claim.
The survey found that, on average, drivers stayed with the same provider for two years and eight months, while 15 percent did not change providers for five years or more.
Drivers were also asked about their views on the renewal process and the information they received from insurers.
Despite recent changes aimed at making renewal licenses more accessible and comprehensive, many drivers find renewal information difficult to understand.
Those who allow automatic renewal of their insurance can each be out of pocket up to £ 277
Only 23 percent of drivers said they read the renewal information carefully.
About 49 percent check their renewal premium against what they paid for last year’s coverage, 37 percent examine their renewal papers for any changes in coverage that were being offered, while only 29 percent consider the level of coverage for they needed for the year ahead.
A third of drivers said renewal communications should be clearer, with 45% asking for standard wording to make renewal letters easier to understand.
A quarter would like to see more reminders for shopping on renewal, while 29 percent would like the renewal period to be extended to give them more opportunity to change.
Lee Griffin, chief executive of GoCompare, said: ‘March, with the launch of the first license plate of the year, is historically one of the busiest months for policy renewals.
‘But our research highlights that millions of drivers are not actively involved in the renewal process – potentially leaving hundreds of pounds out of pocket.
“After almost a year of living under the restrictions of Covid-19, the economy has had an outbreak, leaving millions of people on low incomes.
‘Insurers are helping those in dire financial straits through deferred payments and, in these circumstances, it may be in the policyholder’s interest to stay with their current provider.
‘However, it is well known that, unlike most companies that offer loyalty rewards and discounts to continuing customers, insurers typically reserve their best deals to attract new ones. Therefore, drivers who are still paying their premiums really need to make purchases, especially if they have been with the same supplier for a while. ‘
How To Get The Best Auto Insurance Deal
GoCompare gave drivers a few tips to get the best car insurance deals:
1. Never accept your renewal quote without first checking to see if the price offered is competitive, even if your insurance company was the cheapest last year.
2. Give yourself time to review your cover – write down the renewal date on your calendar and shop at least a week before your policy renewal to get the best deal.
3. Compare prices and check the fine print. Be sure to make equal comparisons and understand all charges, penalties, exclusions and terms and conditions that you must comply with.
4. Use a comparison website, they provide quick and up-to-date information on a wide range of financial products and services.
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