HOUSEHOLDS are being warned to challenge their home and car insurance renewals today, as it is the last chance you can switch and potentially save hundreds.
New rules coming in from tomorrow will stop insurers charging existing customers more than new ones when they renew their policy, but many are being overcharged ahead of the changes.Half of households have seen their insurance premiums increase when sticking with their existing provider[/caption]
There are no prizes for loyalty when it comes to insurance.
You can end up paying hundreds of pounds more for your home and car insurance if you let your policy auto-renew with your existing provider.
City watchdog the Financial Conduct Authority (FCA) has introduced new rules from tomorrow, 1 January 2022, that ban insurers from offering new customers better deals than loyal customers.
But today is the only day left where there are no protections if you are renewing your home or car insurance – which means you could get a cheaper deal but you had better hurry up.
Research by comparison website Compare The Market has found that people risk paying more than £450 when stuck in the insurer loyalty trap.
Its analysis found that half of households have seen their insurance premiums increase when sticking with their existing provider at the point of renewal in the past 12 months by an average of £81.
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In contrast, new customers who switched provider pay on average £262 less for motor insurance and £113 less for home insurance than those who stay put, a total saving of £456.
There are warnings that the ban on charging existing customers more than new ones could lead to price hikes for everyone.
How to cut your insurance costs
Compare the Market estimates that households and drivers could typically pay £375 less on home and motor insurance by shopping around for a cheaper insurance deal.
Your insurer will usually send you a letter three to four weeks before your policy ends to offer you a new price.
Unless you have opted out, your policy will move to this pricing for another year once your contract ends.
You don’t have to accept this though.
Instead, you can use this renewal letter to compare prices elsewhere.
Use a comparison website to see if other providers can beat what you are being offered.
It is worth checking a few comparison websites as they may have offers from different providers.
There are also some insurance providers such as Direct Line that aren’t available through comparison websites, so it may also be worth checking directly if you can making a saving.
How to make sure you're not being penalised for being loyal
THE best way to beat the loyalty premium is to check if you can switch and save.
These are some of the best websites to use to find a better deal on your provider. Remember though, if you are thinking about switching before your term is up then you could face an early exit fee.
To compare home insurance, you will need to provide information such as your address, property value, security features you have installed, how much your possessions are worth and previous claims history.
Shopping around for building and contents insurance for your home could save you £113 annually, according to Compare The Market.
Drivers shopping around for car insurance will need to provide vehicle details, where your car is kept as well as your age, profession, driving history and track record.
You could save up to £262 by shopping around for car insurance, Compare The Market claims.
Once you have an idea of different prices, it may be worth phoning your current insurer to see if they can beat the premiums on offer.
If your insurer cannot offer you are better deal, then you are welcome to switch to someone else.
A comparison website can often help manage the switch to a new provider, you will just need to provide your bank details and agree on the claims excess you are prepared to pay.
We advised drivers renew their insurance exactly 20 days before the expiry date – it could save you an average £306.
We have rounded up some of the best apps that will help cut the cost of your car cover.
Here is how you can get a winter car check, that will make sure your vehicle is safe for driving over the coming months.
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