Car owners are being encouraged to shop around when renewing their motor insurance as the so-called ‘loyalty tax’ is costing an average increase on premiums of £42, and some drivers are paying even more.
Changes to the rules from Financial Conduct Authority in 2017 was supposed to ensure that the insurers gave policy holders fair warning that their premium would auto-renew at a higher rate, but despite these changes 51 per cent of drivers don’t recall seeing any notifications according to a survey by MoneySuperMarket. The practice of hiking premiums for those who leave it to auto-renewal is catching out 17.1 million drivers, at a cost £720 million.
The survey found that eight per cent of drivers allow their premium to auto renew without shopping around, while one in five decide to stick with their current provider as they find it easier.
“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,” said Kate Devine from MoneySuperMarket. “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%.
“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.”