Drivers are being warned that they could be paying far too much for their car insurance by allowing their car insurance policy to renew automatically.

A new study by MoneySuperMarket has found that there are close to 17 million drivers who allow their insurance policy to auto-renew and that this lapse is costing motorists a total of £674million a year. Amazingly that figure has jumped by 175 per cent on the previous year.

The price comparison provider’s study found that there was 40 per cent of drivers allowing their car insurance to renew. The consequences for this on an individual level is that a quarter of policies rose by £40, but one in five policies jump by £51 to £125.

Dave Merrick, car insurance expert at MoneySuperMarket, said: "If you let your car insurance auto-renew you’ll more than likely see an increase in your premiums, with our research showing that the average premium can increase by £40.

"Although some of us are shopping around for a better deal, the number of people allowing their policy to auto-renew has doubled in just a year, meaning that even more people are paying a loyalty tax by staying with their insurer."

MoneySuperMarket found that the key reasons for allowing policies to auto-renew was the hassle, with 20 per cent saying they stayed with existing providers was for each and one in five saying that changing insurance company was too much effort.

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