A simples guide

How to Manage Car Insurance Renewal

If you’re in the process of renewing your car insurance, you may think you’re only securing cover for the next 12 months only. Although your policy will only be in force for a year, the new one will automatically be issued next year.

Many drivers get caught out. To give you an idea of how widespread the problem is, every year, drivers spend an eye-watering £1.3 billion more than they need to on car insurance renewal, because insurers set up policies that renew automatically.

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So how does automatic renewal work?

Firstly, we should say that in itself, auto-renewal isn’t a bad thing. Continual cover can be very handy, as it prevents you from accidentally becoming uninsured, which is illegal. But, if you’re not aware your insurance is set up this way, it could possibly mean an unnecessary purchase of a second car insurance policy, leading to overdrawn accounts, and default fees.

So here are the facts: many car insurance policies contain an automatic renewal clause that states your policy will be automatically ‘renewed’ for another year if you don’t give them notice within a certain period - usually four weeks.

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Automatically renew your car insurance

In an ideal world, your insurance provider will contact you well in advance of your policy expiring to ask if you want to renew. You can either cancel at renewal or continue the cover with a 14 day cooling off period from the date of receiving the letter in case you decide to change insurer again. But if you don’t receive the letter for whatever reason, and don’t cancel in time, you policy will auto renew, possibly at a higher premium than you paid last year. Also, if your insurance policy is auto-renewed and you haven't told your insurer of changes in your circumstances, such as moving home or getting points on your licence, your policy could be invalid. 

Can car insurance companies automatically renew my car policy?

Yes they can - at whatever premium they choose. Insurers will contact you but if auto renewal was agreed at the point of original contract then by not doing anything means you are automatically agreeing to that premium. However you do still have a 14 day cooling off period should you wish to cancel your policy once it’s auto renewed.

In December 2015, the Financial Conduct Authority (FCA) proposed measures to streamline the insurance renewals process, to make sure customers are fully informed before renewing policies.  

The proposals state that:

  • Insurers must disclose the previous year’s premiums on renewal notices
  • Insurers should identify and engage with consumers who have renewed the same product four times or more
  • Guidance should be given to insurance firms, to improve their processes around renewals
  • Insurance firms should take advice on the records they keep, to demonstrate compliance, including a record of premiums

Sadly, these rules are not yet in force, and there’s no suggestion if and when they will be. Fingers crossed it’s soon.

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So what are my rights?

When it comes to car insurance renewal, you have a ‘cooling off’ period – usually 14-days, during which time you’re entitled to cancel it. You are always entitled to cancel your cover at any time during the year but there may be charges and you wouldn’t earn that year’s NCD. It’s no different to selling your car and cancelling mid-term but bear in mind, you may have to pay an admin fee for cancellation and the proportion of the premium for the time you have been covered.

How can I get a better deal on my renewal?

There are various things you can do to bag yourself cheaper car insurance renewal. Here are the two most important:

  1. 1.  Don’t leave your car insurance renewal until the last minute

If you’re one of those people who leaves everything to the last minute, don’t do it with your car insurance – as it can cost you. In fact, our research has found that the best time to renew your policy is three weeks before renewal. You could make significant savings by renewing your car insurance three weeks in advance compared to leaving it to the last minute. That’s quite a saving.

However, if you’re not so well organised and have left getting your insurance to the last minute don’t worry, you can get a new policy with us and could be on cover in just thirty minutes.

  1. 2.  Shop around

The more time and research you put in to obtaining a car insurance quote, the more likely you are to get a great deal. This is especially important if you’re over 70 or under 25, or at the first year renewal stage, when premiums are generally at their highest.

Luckily, we can help you find the best car insurance renewal quote. Whether you’re looking to beat your current car insurance provider’s renewal quote, or insure a new vehicle, our simple and easy to use comparison service can save you time and help you find a better deal in minutes so get comparing and see how much you could save.

So what are you waiting for? Get a quote for your car insurance today with comparethemarket.com.