Switching your car insurance early could save you upwards of £300

There are lots of things to think about when switching your car insurance, including cost. But did you know you could be missing out on significant savings by not switching your policy at the right time?

Our car insurance premium data for the last nine years shows that drivers could be losing out on upwards of £300 of savings based on when they switch their insurance. Two factors contributing to these savings are:

  • The time of year that you switch
  • The number of days left on your policy when you switch

You can save on average of £306 simply by switching 20 days ahead of your renewal date

When you switch that far in advance, premiums cost an average of £401, while switching on the day your policy ends costs an average of £707.

Our research also shows that costs continue to rise in the 20 days before your policy ends. On average, premiums are £431 two weeks before, £506 one week before, and £617 the day before the policy ends, which is still £90 cheaper than switching the day it expires.

But despite the substantial savings on offer, the highest proportion of quote comparisons on comparethemarket.com take place on the day before and the final day of a policy, accounting for 32% of all enquiries. More than half (58%) look to switch within one week of their policy ending.

The best time of year to switch

Monthly changes in the cost of motor insurance over the last eight years show that prices are usually cheap in the first three months of the year, steadily rising through the year to then spike in December. December has consistently been the most expensive month, with an average premium of £703. This is £50 higher than the average premium for the rest of the year and £64 more than March – typically the cheapest month for car insurance.

But why does the price fluctuate so much? Sometimes, insurance providers offer discounts at the start of the year in addition to car insurance being based on a wide range of factors, including annual mileage, car make and model and previous claims history. Insurance providers will look at these, and then could offer discounts to attract new customers. This ‘dynamic pricing’ model means the cost of insurance could change throughout the year depending on the amount of demand at that particular time.

However, while December has been the most expensive month, switching in January or later may be even more expensive. The Financial Conduct Authority (FCA) is introducing new pricing regulations in January 2022 that prevent insurers from offering discounts exclusively to new customers. These rules benefit loyal customers but could mean insurance prices no longer vary as much by time of year and insurers may choose to increase premiums for new customers when switching from January to make up the difference.

Ursula Gibbs, director at comparethemarket.com commented:

“Insurance pricing can be complicated, and insurers use a wide array of factors to decide the cost of a policy. However, our figures clearly show that prices change significantly depending on when you choose to take out or renew a policy. Many people leave it until the last minute, but you can save a considerable amount of money by switching roughly three weeks before your policy is due to auto-renew. Shopping around remains one of the best ways to cut the cost of insurance, and these figures prove that this saving can be increased by more than £300 by timing a policy switch well.

"While motor insurance has typically been cheap at the start of the year, 2022 could be different. With a major regulatory rule change fast approaching, the cost of insurance could increase significantly next year. If your policy is due to auto-renew in the next few weeks, you may be better off switching sooner rather than later."

Three things to think about before you switch

  1. Don’t leave it until the last minute: By planning ahead and switching roughly three weeks before your policy is due to end, you could save upwards of £300. The closer you get to the end of your policy, the more expensive your new policy is likely to be.
  2. Shop around for your insurance: Comparing deals and offers from different providers is one of the best ways to cut the cost of insurance. However, bear in mind that providers won’t be able to offer discounts exclusively to new customers from 1 January 2022.
  3. Switch before the end of 2021: If your policy is set to expire before the end of 2021, switching sooner rather than later could likely save you money due to the new rules being introduced in January 2022.