Customers who don’t change their car insurance could be overcharged by as much as £1400 if they don’t switch providers. This is also the same for home insurance.
An audit of 9,000 motorists and 8,000 homeowners by research agency Consumer Intelligence found that after three years the average driver was overpaying by £75 and the homeowner by £66.
Customers who stay with their insurer for years at a time are the ones who lose out most, particularly in home insurance. After nine years, home insurance customers who stay loyal are typically overcharged £127, while drivers are paying £116 too much.
In the first year the differences are small – £37 for home and £63 for car insurance. However, over time they increase and within 10 years someone who has failed to switch either type of policy will be paying a little over £1400 more compared to someone who actively goes on comparison sites and switched every year.
New rules that were introduced last month force insurers to tell buyers at renewal stage what their premium was the year before. The Financial Conduct Authority said that measure alone should save consumers more than £100m, by alerting them to the scale of a premium increase.
Experts say that will not be enough to stop insurers slowly increasing your premiums over the years and some insurers are relying on customers not challenging them about the increase.
Rory Stoves of comparison site uSwitch said: “The challenge is that after your first switch you tend to give yourself a pat on the back, and then leave it for a few years. If the renewal notice shows you it’s just an extra £20 or so, a lot of people might think it’s not worth the bother. But over time you’ll be over paying by hundreds of pounds.”
The Association of British Insurers said the rules on renewal transparency are only just coming into force and will benefit consumers.
A spokesman said: “These will ensure that renewal notices show the current as well as the new premium, and contain a reminder to policyholders to consider shopping around. We actually called for the regulator to introduce these changes across the board so they applied to that all customers, regardless of from who they bought cover.
“Giving these measures time to bed in should ensure that more customers have greater confidence to shop around.”
If you’re looking for a competitive rate on your Motor Trade Insurance then drop an email to firstname.lastname@example.org or call 0191 482 0050.
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