The dangers of auto-renewing your car insurance

Staying in the same lane might be costing you dear. We explain why auto-renewing might be a massive drain on your finances.

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Auto-renewing your car insurance seems like an obvious and easy option. Why waste time looking for a new deal, when you’re happy with the one you’re on?

Sadly life and insurance isn’t that simple. Your blind loyalty could be costing you hundreds of pounds.

Fortunately, there are ways to fight rising auto-renewal costs.

Auto-renewing car insurance dangers

Higher prices. Loyalty doesn’t always pay. In 2016 a UK report calculated the total amount of money that insurance customers wasted by accepting the auto-renew price they received from their provider. In total, about £1.3 billion went to insurers when customers could have shopped around.

Doubling up. With some insurers you need to call to cancel. If you don’t realise this clause is in your contract, you may go get an insurance policy from a different provider, then one morning wake up and gasp in horror when you see you’re paying for two policies!

Going uninsured. Some people think their car insurance will just rollover. In some cases it doesn’t. This can be a massive problem if the unwitting, uninsured driver then gets into an accident or stopped by the police.

Why do insurance prices go up even if you don’t claim?

So you’ve been a safe and responsible driver. No claims on your record. Meanwhile, you’ve stayed with the same insurer so you feel your loyalty should be rewarded.

Then you get your auto-renewal bill and shock sets in. It seems ridiculous but your premium has gone up drastically.

Well, there are literally dozens of factors that impact your insurance quote, including your age, the area you live in, driving experience, occupation, your claims history, your credit score.

So a life change like moving house might suddenly force your premium up or down. If your new area is rife with car crime then the insurer may hit you with higher fees.

Yet there are external influences too. Your provider may have had a jump in claims over the last year, which it might have to offset by charging other customers more.

Or, it might even be part of your insurer’s business plan to put up the auto-renewal price in the hope that you’ll forget to investigate other options, fail to act quickly enough or simply pay it because you think it’s easier.

Asking for a discount

If you’ve been driving responsibly then you could well ask for an insurance discount. Here are some steps you could take.

1. If you receive an insurance quote you think is unreasonable, search online for cheap car insurance deals.
2. Find three different quotes and contact your insurer. Call, chat on their website, send an email or write a letter.
3. Ask if it can give you a better offer. Insurance companies know attracting new customers is harder than keeping existing ones, so it might dangle a carrot for you to stay.
4. If your insurance company turns you down, look elsewhere. Other insurers might entice you with discounts and a better premium. At the very least compare your options and get some quick quotes online.

What if an insurer mistakenly renews your contract?

Immediately get in touch with your provider and explain you weren’t aware your policy would be automatically renewed. You’re within your rights to ask for a refund too.

To avoid the hassle in the future though, it’s worthwhile really scanning the Terms and Conditions so the insurers don’t catch you out again! When you agree to the deal, make sure you read up on cancelling during the cooling-off period and look up any cancellation fees.

Ways to lower your auto insurance costs

  • Telematics policy. Fitting your car with a black box which measures your speed, distance travelled, and what time of day or night you drive can cut your costs.
  • Higher excess. Your excess is the amount you’ll have to pay should you make a claim. By taking on a higher excess your premium will be lower. However, make sure you can afford to pay it should anything happen.
  • Pay annually. Paying a one-off annual fee is typically cheaper than paying monthly. This is because you might be charged interest on the instalments.
  • Your car. The make and age of your car will impact how expensive your premium will be. If you’re buying a new vehicle, it’s worth researching for one that insurers approve of.
  • Mileage. If you limit your mileage you could pay less on your premium. Take a train on a really long distance trip perhaps? Or walk to the shops instead?
  • No claims discount. Drive safely and avoid making any claims and you should be rewarded. Although loyalty doesn’t always equal reward. Sometimes you have to look to another provider.

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