Car insurance customers set to pay £42 more each year when auto-renewing their agreement
Martin Lewis offers advice about cancelling car insurance
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New data has revealed 17.1millon drivers let their car insurance policy auto-renew last year at a cost of £720million. This is a seven percent increase on the £674million total spend recorded the year before.
In total, 41 percent of drivers let their car insurance automatically renew despite the dangers of higher costs.
Those who failed to change their policy saw premiums increase by £42 on average with one in five seeing price jumps between £256 and £50.
Meanwhile, one in 10 recorded price rises of between £51 and £75 while eight percent of road users saw prices rose between £76 and £100.
Kate Devine, car insurance expert at MoneySuperMarket warns auto-renewing agreements “almost always sees you end up paying more”.
She has urged road users to “always shop around” before agreeing to stick with their current provider for another year.
She said: “Letting your car insurance auto-renew almost always sees you end up paying more, with our research showing that the average premium increase last year was £42.
“While it’s great to see that many of us are shopping around for a better deal, the number of people allowing their policy to auto-renew is still high at 41 percent.
“If your policy is coming up for renewal, you should always shop around to see what deals are on the market – a new deal on your car insurance is very easy to find online and could save you up to £218.”
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Of those who stay with their current provider, one fifth said this was simply for ease.
Meanwhile, one in 10 believe changing car insurance providers is too much time and effort.
A further 13 percent said they do not believe there are significant savings to be made by switching agreements.
The Financial Conduct Authority (FCA) transparency rules are in place to encourage road users to shop around.
Firms must highlight their previous year’s premium price against their current renewal piece and make clear any price increase or decrease.
But despite this, half of road users do not recall seeing these notifications at all.
Of the remaining half, a third said the warnings did not encourage them to shop around.
Money Saving Expert Martin Lewis urged road users to look round at other agreements before auto-renewing.
Speaking on his Martin Lewis Money Show earlier this year, he said insurance firms “walk the price up” each year to catch out existing customers.
He said: “Talking beats price walking. Price walking is the fact that when you go to an insurer, if you stick with them each year, they walk the price up by £20 or £30.
“So the more you are with them, the more you pay.”
He added: “My golden rule is never auto-renew without checking prices elsewhere first.
“To put it in context, if your new car insurance costs £285, on average, after five years it would cost £370.”
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