Should I auto-renew my car insurance?

Letting your car insurance renew automatically is the easy option – but it could mean you miss out on savings on your car insurance premium. Here are our tips on how to break the auto-renewal habit.

Letting your car insurance renew automatically is the easy option – but it could mean you miss out on savings on your car insurance premium. Here are our tips on how to break the auto-renewal habit.

Daniel Hutson
Head of Motor Insurance
6
minute read
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Posted 5 NOVEMBER 2019 Last Updated 23 DECEMBER 2021

What is car auto-renewal and how does it work?

When a car insurance policy runs out, most providers will automatically renew it for another year. Not all do though, so check your policy terms, or you might find yourself driving without insurance

If your provider does offer an auto-renew quote for your policy, they’ll usually send you a letter around three to four weeks before the renewal date. 

You’re not under any obligation to renew your policy with your existing provider. But lots of us do, simply because it’s less hassle. Just be aware that you could be losing out on potential savings.

How do I cancel my car insurance renewal?

Let your insurance provider know you want to cancel your policy before the renewal date. If you tell them after this, you might have to pay administration fees.

You should follow any instructions on cancelling your car insurance, which will be set out in your contract.

Some insurance providers require written confirmation by letter or email, while others will cancel by phone. If you cancel by phone make a note of the time, date and the name of the person you spoke to.

I’ve received my renewal letter. What should I do? 

This is your opportunity to shop around and find a better deal. You should get your renewal letter three or four weeks before your policy is due to end, but check the renewal date just to be sure. Our research shows that three weeks before the renewal date is the best time to look at switching. 

When you compare with us, AutoSergei will do all the legwork. He’ll compare prices and let you know if there’s a better deal before it’s time for you to renew.

Can insurance providers auto-renew my policy?

Insurance providers can auto-renew your policy and charge you whatever premium they feel is appropriate at the time of renewal. However, since a Financial Conduct Authority (FCA) ruling was passed in April 2017, all car insurance renewal letters must include the previous year’s price, so customers can see the difference in cost. This makes it easier to shop around and compare deals at each renewal.

Did you know?
Reduced annual mileage and lower running costs due to pandemic lockdowns, have helped cut the cost of car insurance this year for many young drivers. But don’t be tempted to auto-renew without comparing first. Our own research reveals that 17 to 24-year olds could save up to £201** on their car insurance by shopping around instead of automatically renewing.

**Compare the Market Premium Drivers Report, October 2021

What happens if I renew my car insurance, then decide to cancel?

If you renew your car insurance, then decide to cancel during the 14-day cooling-off period, you’ll be refunded the cost of your policy minus any days it was active for. You may also be charged an administration fee. If this is the case, the amount should be clearly stated in the policy terms and conditions. 

The 14-day ‘cooling-off’ period starts from the day your car insurance begins or from the day you receive your paperwork – whichever is later.  

You can cancel your car insurance at any time after the 14-day cooling-off period. However, you may be charged a cancellation fee as well as an administration fee for any time the policy was active for. Be aware that these costs might cancel out any refund you may be entitled to.

How can I lower the cost of my insurance?

Here are some tips on how you might lower the cost of your car insurance:

  • Act quickly: You could make great savings by renewing three weeks before your policy is due to end, rather than leaving it until the last minute.
  • Invest in security: Installing an industry-approved alarm or immobiliser could help lower your premium. Talk to your insurance provider about a discount.
  • Add a named driver to your policy: If you’re a new driver, adding someone with more experience and a clean driving record as an occasional named driver could help lower your premium. Just make sure they aren’t named as the main driver if this isn’t the case. This is car insurance fronting and is illegal.
  • Increase your voluntary excess: If you increase your voluntary excess, your premium will usually reduce. Just make sure you can afford to pay both the voluntary and compulsory excess should you need to make a claim.

Why should I compare car insurance?

Comparing car insurance with us is a quick and easy way of finding the right policy to suit your needs – and it might even save you money.   

Just because your insurance provider has an auto-renewal facility doesn’t mean you should feel pressured into accepting it. So, when your policy is next up for renewal, compare and see if you could save.

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Frequently asked questions

What can affect the cost of my car insurance premium?

Insurance providers consider various factors when it comes to calculating your premium. If any of these change, they’ll determine if your premium goes up or down when you renew or switch providers. For example: 

  • Your job.
  • Your age.
  • Your address.
  • Your annual mileage.
  • The value of your car.
  • If you’ve made any claims.
  • If you’ve had any driving convictions, since your last renewal,  like a speeding fine

Find out what else can affect the cost of your car insurance premium.

Can I transfer my no claims bonus if I switch instead of renewing?

In most cases, yes, you won’t lose your no claims bonus/discount if you decide to switch instead of renewing. Just make sure you have proof of no claims. This may be on the renewal letter or cancellation letter you’ll receive when switching. 

If you can’t find your proof of no claims, contact your provider and ask them to send it to you. You might also need to check what type of proof your new provider wants, as this can be different depending on the provider.

Can I have two insurance policies on the same car?

Yes, doubling up is a possible risk of auto-renewal. If you just assume your policy expires after 12 months, and you take out a new policy without cancelling the old one, your insurance provider may auto-renew, and you could find yourself with two active policies. 

While it’s not illegal to have two policies on one car, you can’t make the same claim from both insurance providers. This would be considered fraud and is illegal

However, doubling up does mean you’ll be paying twice for the same car, which is a waste of money.

How do I know if my insurance provider auto-renews?

Check your policy terms and conditions. If your insurance provider auto-renews, it will say so in there. Or contact your provider directly and ask them. Don’t just assume they auto-renew. If they don’t, and your policy expires, you may find yourself driving without insurance. Driving uninsured is illegal and could lead to a hefty fine and even a criminal conviction

Your insurance provider should let you know when your policy is due to expire, but ultimately, it’s your responsibility to make sure you’re properly insured.

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