Motorists across the UK are overpaying for their auto coverage by allowing their insurer to automatically renew their policy, according to a study by GoCompare.
The study found that, at their last renewal, 44% of drivers allowed their insurance to automatically roll-over – with 13% doing so without checking to see if they could get a better deal. This has led to millions of policyholders overpaying for their coverage to the tune of £982 million a year – with each individual policyholder missing out on up to £239.69 in potential savings.
According to the study, 22% of motorists surveyed have allowed their insurer to renew their policies automatically on the assumption that, since their insurer offered the cheapest premium the previous year, they would continue to offer good value this time around. Twenty-one per cent (21%) said that switching is too much hassle, while 19% cited loyalty to their insurer as reason for automatic renewals.
The research also revealed that how motorists paid for their insurance cover had a bearing on how likely they are to shop around at renewal, with motorists who pay for their insurance monthly rather than annually 55% more likely to allow their policy to automatically renew.
“Insurers typically use their most competitive offers to attract new customers and rely on existing customers’ apathy to charge higher renewal prices,” said Lee Griffin, founder and chief executive officer of GoCompare. “With 55% of drivers more likely to allow their policy to automatically renew if they pay monthly, it’s time for people to take control of their finances and consider how much they could be saving by switching.
Griffin said that motorists should always monitor any changes in their auto policies.
“Drivers could also find themselves left out of pocket if they’re not keeping an eye on rises to the compulsory excess amount,” he said. “Some drivers agree to pay a higher amount towards the cost of a claim in return for a lower premium. However, if these drivers make a claim, their voluntary excess is added to the insurer’s compulsory excess – which can add up to a considerable sum.”