Car insurance mistake is costing drivers £218 a year each

New research by MoneySuperMarket reveals that 17.1 million drivers let their car insurance auto-renew last year at a cost of £720 million– a 7% increase on last year (£674 million).

The price comparison site found 41% of drivers let their car insurance policy renew automatically – the same percentage as last year.

Drivers saw their premiums increase by £42 on average. One in five saw jumps between £26 and £50, while one in 10 saw rises between £51 and £75 (9%) and £76 and £100 (8%).

Nearly one in ten (8%) drivers allow their insurance to renew automatically without shopping around for a cheaper deal, with a fifth (20%) staying with their existing provider for ease. A tenth (12%) believe changing car insurance provider is too much time or effort, and a further tenth (13%) do not believe there are significant savings to be made.

The Financial Conduct Authority’s transparency in insurance renewals rules that came into force in 2017 are intended to encourage drivers to shop around by highlighting, in a prominent manner, their previous year’s premium price against their renewal price, alerting drivers to any increase or decrease. Despite this, half (51%) of drivers do not recall seeing these notifications. Of the remaining half (49%) that did see the notifications, a third (31%) said that they did not encourage them to shop around.

MoneySuperMarket’s research also reveals that the cost of an average premium decreased by 3% year-on-year – from £503 in Q4 2019 to £490 in Q4 2020. However, premiums actually increased by 3.65% from £473 in Q3 to £490 in Q4 of 2020. Residents of East London had the most expensive premiums in Q4 2020 (£955) – over double the UK average. London as a whole had an average premium of £690, compared to £330 in the South West. Kirkwall in Scotland (£269) had the cheapest premiums in the UK.

Cheapest regions for car insurance in the UK:

Region

Q4 2020 cost

1

South West

£330

2

Scotland

£377

3

Wales

£397

4

South East

£407

5

East

£427

6

North East

£449

7

East Midlands

£469

8

Northern Ireland

£473

9

Yorkshire & the Humber

£526

10

North West

£575

11

West Midlands

£582

12

London

£690

Kate Devine, car insurance expert at MoneySuperMarket, said: “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. 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.”

Visit the MoneySuperMarket website to find the best deals on car insurance.

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