Lockdown and the continued economic uncertainty over the impact of Covid and Brexit, means it is more important than ever that drivers pay close attention to their car insurance renewal this year.
According to new research by the leading comparison website, 6.7m motorists paid a ‘loyalty tax’ to their insurer for allowing their policy to be automatically renewed in the last 12 months, without seeing if they could buy identical cover for less money.
The research revealed that there has been a 40% increase in the number of drivers leaving their insurance to roll-over without checking other quotes. Over a fifth (21%) allowed their cover to auto-renew, compared with 15% of drivers admitting to doing so in the same survey six months ago. The number of drivers auto-renewing without shopping around is at its highest level since GoCompare Car Insurance’s survey in February 2017 (23%).
When asked why they allowed their car insurance to automatically renew a fifth thought that because their provider was the cheapest last year, they would be good value this time around too. However, 20% had stayed put because they had talked to their existing insurer about reducing their payments or taking a premium holiday, due to financial hardship caused by the pandemic.
Other reasons for sticking with the same provider included loyalty (22%), concern over the hassle and ease of switching (17%), and worries over the loss of their no-claims bonus (11%).
The research found that on average drivers have been with their current insurer 2.9 years. 29% of drivers have stuck to the same provider for three years or more, while 15% have stayed loyal for over five years.
Drivers were also asked about the renewal process which revealed that only a quarter thoroughly read the information they received. Less than half (49%) check their renewal premium against what they paid for cover the previous year, a third check their renewal papers for any changes to the cover they were being offered, while only 27% considered the level of cover they needed for the year ahead.
Lee Griffin, CEO and founder of GoCompare Car Insurance commented, “September is traditionally one of the busiest months for renewals due to historic new car sales. Our research shows that millions more drivers are not actively engaging with the renewal process this year, potentially leaving themselves hundreds of pounds out of pocket by effectively paying a ‘loyalty tax’. Drivers who are still paying their premiums really need to carefully consider their options and shop around to see what other insurers are willing to offer them.
“The good news is that car insurance premiums are falling due to less traffic on the roads and fewer claims. As a result, some drivers may actually see a premium reduction on their renewal letter, however that is the signal that they could probably get an even better deal elsewhere. It only takes a few minutes to compare policies and prices, and most of the information you need to do this is in your renewal notice. Just over half of customers using our site could save up to £289, making it time well spent
|
