Many loyal auto insurance customers have been with the same company for a decade, but insurers aren’t rewarding their loyalty or raising prices until January 2022. Even now, shopping is the only way to get the best auto insurance deal
Millions of drivers have been with the same car insurer for 10 years or more – and are likely overpaying millions of pounds a year.
According to a study by comparison website GoCompare, a sense of loyalty has kept 2.1 million drivers, or 6 percent of all motorists, with the same auto insurer over the past decade.
But sticking with the same insurer means drivers may end up paying hugely inflated prices for their car insurance – despite recent help from the Financial Regulator.
GoCompare found that the older generation is less likely to switch car insurance.
Around 12 percent of those over 65 said they had been with the same car insurer for more than 10 years.
No reward for loyalty: Drivers who stay with one insurer are likely to overpay, and this is especially true for motorists who didn’t shop before January 2022
Not switching car insurance costs drivers an extra £675m in unnecessarily high premiums every year, according to rival comparison company Compare The Market.
GoCompare research also found that a quarter (26 percent) of people stayed with the same insurer out of loyalty.
For those over 65, almost half (47 percent) said loyalty is the reason they stay with their insurer.
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Almost one in five drivers (19 percent) automatically renew their car insurance with the same insurer without looking around. This group states that this is because they found the switch cumbersome or difficult.
GoCompare’s auto insurance expert Ryan Fulthorpe said, “Those 2.1 million people could lose out not only on financial savings, but also on improvements to their insurance coverage.”
Take a look around to save money on car insurance
There is no substitute for motorists who want the best auto insurance rates to shop around.
Until January 2022, motorists had to pay significantly more for car insurance if they did not switch their insurer at the end of the 12-month term.
This “loyalty penalty” for insurance companies arose because insurers would typically offer new customers low prices to entice them to sign up and would make up the difference by charging loyal customers more.
But last January, the regulator Financial Conduct Authority banned the practice, saying insurers could no longer charge their loyal customers more than new ones.
In practice, this has removed some of the incentive for drivers to shop around, as they won’t face the same steep price hikes when their policy auto-renews.
But a driver’s current insurer may not be anywhere near the cheapest on the market, meaning it’s still best practice to shop around.
Fulthorpe added: “Although the general insurance pricing practices introduced by the Financial Conduct Authority last year are now in place, they only protect the price a driver would have from the same provider by ensuring a renewal price is the same price a new customer would receive with the same risks.
“By not looking around, drivers don’t allow other insurers to assess their risks and offer an insurance policy.”
Can you save money on car insurance?
Car insurance bills have a habit of creeping up, so comparing prices for the best deal is a smart move.
The Financial Conduct Authority’s rules, introduced last year, should prevent insurers from increasing renewal offers, but many are seeing prices rising.
It still makes sense to check the comparison sites for better deals. We suggest:
MoneySupermarket*
Confused.com*
GoCompare*
Uswitch*
Also check out Direct Line and Aviva which do not appear on comparison sites.
* Affiliate Links: When you complete a product, This is Money may earn a commission. This does not affect our editorial independence.
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