DRIVERS SPEND OVER A BILLION POUNDS ON MOTOR INSURANCE EACH YEAR BY NOT SWITCHING AT THE RIGHT TIME

  • UK drivers lose £349 a year by mis-timing motor insurance renewals
  • 38% of drivers wait until the day before renewal, or the day itself, to shop around for insurance
  • comparethemarket.com estimates that staying with the same motor insurance provider, costs UK drivers £2.7 billion each year

31 March 2017 – Even savvy drivers who switch their car insurance to a new provider each year could still be missing out on significant savings. According to the latest research by  comparethemarket.com, consumers should consider switching their car insurance three weeks before the renewal date to take advantage of the optimal saving. By switching at the timeliest moment, consumers could stand to save £349 on motor insurance over the course of the year.

Getting the timing right on insurance renewals leads to significant savings, but further steps are being taken to help consumers remember to consider switching provider. From Saturday (01 April 2017), following the Financial Conduct Authority’s previous ruling,  all general insurance providers must show the price of last year’s premium on renewal notices, meaning consumers will be able to see by how much their new premium has either increased or decreased. This move should encourage more people to compare providers and search out a more cost-effective deal ahead of renewal.

Comparethemarket.com data shows drivers can stand to save, on average, £349 if they opt to switch their car insurance provider three weeks prior to the renewal date, when the average cost of a policy is £407, in contrast to the average price on the day of renewal which is £756. However, 23% of consumers wait until the day of renewal to shop around for a new policy. Drivers who wait until the last day to switch are therefore collectively missing out on an estimated £1.12 billion of savings. 

The cost is even greater for those who do not compare providers. A rise in whiplash claims, increases to Insurance Premium Tax (IPT) and changes to the Ogden Discount Rate have all contributed to motor insurance premiums reaching their highest levels for at least the last four years. Only 40% of motorists switch their provider every year, meaning that those who don’t shop around (60%) are collectively missing out on an estimated £2.7 billion of savings. 

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Simon McCulloch

Director

comparethemarket.com

“The way insurers decide on pricing changes over the course of the month demonstrates their understanding of consumer behaviour. It is human nature to put off chores like buying insurance to the last minute, but people probably aren’t aware that they are being financially penalised for it too. Many people do not realise that the price of insurance products change in the run up to the renewal date and, even if they do, still struggle to act on their good intentions.

“The cost of insurance has increased over the past few years suggesting that providers are relying on inertia to raise prices and those who don’t compare providers, have even more to lose. One of the most effective ways of injecting more competition into the market is by encouraging consumers to search out the best deal. This, coupled with getting the timing right, could lead to even greater savings.”

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