4.1m drivers caught in £982m insurance loyalty trap: Traffic

27 August 2019, 08:50

4.1m drivers caught in £982m insurance loyalty trap

  • 13% of motorists allow their insurers to automatically renew their policy without shopping around to check whether they’re getting a good deal;
  • Renewing without checking prices costs drivers a collective £982m a year;
  • 20% of drivers have been with the same insurer for 3 years or more;
  • Motorists who pay for insurance in monthly installments are 55% more likely to allow their cover to renew automatically than those who pay annually.

Ahead of one of the busiest months for car insurance renewals, new research* by GoCompare Car Insurance reveals millions of motorists are overpaying to the tune of £982m a year for their car cover by allowing their insurer to automatically renew their policy.**

At their last renewal, 4.1 million drivers rolled-over their insurance without checking to see if they could get the same cover for a cheaper premium – each missing out on a potential saving of up to £239.69.

The new car sales peak in September meaning millions of drivers will be renewing insurance this month. GoCompare Car Insurance’s Auto-Renewal Study found that, at their last renewal, 44% of drivers allowed their insurance to automatically roll-over, 13% doing so without checking to see if they could get a better deal.

Drivers’ main reason for renewing automatically (22%) was the assumption insurers offered the cheapest premium the previous year, so they would continue to offer good value this time around, followed by switching is too much hassle (21%), loyalty to their insurer (19%) and lack of confidence to switch (10%). Other reasons included not dealing with the hassle of canceling a monthly direct debit (10%), as well as finding the thought of switching insurer difficult (7%).

The research also reveals that how motorists paid for their insurance cover had a bearing on how likely they are to shop around at renewal.  Drivers who pay for their insurance monthly rather than annually are 55% more likely to allow their policy to automatically renew.

Nearly a third (31%) of motorists pay for their insurance in monthly installments, but drivers from the lowest earnings groups are 36% more likely to be monthly payers.  While monthly payments allow customers to spread the cost of cover, insurers typically impose fees and interest charges which ultimately make this is the most expensive way to buy insurance.  Therefore, it is often those who can least afford it, who end up paying more.

The Auto-Renewal research also found that only 37% of drivers look at what they paid for their insurance last year to see how it compares with the renewal offer, fewer still (20%) read through their renewal information to check for any changes to the cover offered.

When asked about changes to excess amounts, the research revealed respondents who admitted to having no idea whether their compulsory excess had increased or not are 26% more likely to let their car insurance automatically renew, with 7% admitting they don’t know what a compulsory excess is.

Commenting on the research, Lee Griffin, CEO, and founder of GoCompare said, “Insurers typically use their most competitive offers to attract new customers and rely on existing customers’ apathy to charge higher renewal prices. 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.

“Drivers could also find themselves left out of pocket if they’re not keeping an eye on rises to compulsory excess amounts. 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.

“Using a comparison site like GoCompare enables you to clearly see the excesses you will pay and edit quotes to see how different voluntary excess levels could impact the premium – helping you get the cover you need at the right price. 

“Customers arranging their car insurance with us will now get extra peace of mind knowing they can use our free £250 excess offer, helping to stop them being left out of pocket.”

Four tips from GoCompare to get the best car insurance deals:

  1. NEVER accept your renewal quote without first checking that the price you are offered is competitive, even if your insurer was the cheapest last year.
  2. Give yourself time to review your cover – note the renewal date in your diary and shop around at least a week before your policy renews to get the best deal.
  3. Compare prices AND check the small print. Make sure you make like-for-like comparisons and understand all the charges, any penalties, exclusions and terms, and conditions you will be required to meet.
  4. If you need to spread the cost of your insurance, consider a 0% purchase credit card and set-up a direct debit to clear the total payment over the 12-month term of the insurance. This will work out cheaper than paying the fee and interest charged by insurers for monthly payments.   

For more information about excesses – what they are and how they work – read GoCompare’s new guide, here: https://www.gocompare.com/car-insurance/guide/excess-explained/

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For further information please contact:

Anders Nilsson or Louisa Marsden at GoCompare on 01633 654 054 / 01633 655 132

Gordon, Jason or Liz at MAW Communications on 01603 505 845

Keep up-to-date with GoCompare on Twitter; @GoCompare

Notes to editors

*On 15 August 2019, Bilendi conducted an online survey among 2,000 randomly selected British adults who are Maximiles UK panellists.  The margin of error-which measures sampling variability-is +/- 2.2%. The results have been statistically weighted according to the most current education, age, gender, and regional data to ensure samples representative of the entire adult population of United Kingdom. Discrepancies in or between totals are due to rounding.

**According to independent research from Consumer Intelligence in July 2019, 51% of customers could save up to £239.69 with GoCompare Car Insurance.

Department for Transport’s ‘Vehicle Licensing Statistics: (April 2018)’ by the end of 2018 there were 38.2m vehicles licenced for use on the roads in Great Britain, 83% of which were cars = 31,500,000. 13% of motorists auto-renewed their car insurance policy at the last renewal without checking prices. 13% of 31,500,000 = 4,095,000.

4.095m x GoCompare’s average shop around saving of £239.69 = £981,530,550 rounded to £982m.

GoCompare

GoCompare is a comparison website that enables people to compare the costs and features of a wide variety of insurance policies, financial products and energy tariffs.

GoCompare does not charge people to use its services, and it does not accept advertising or sponsored listings, so all product comparisons are unbiased. GoCompare makes its money through fees paid by the providers of products that appear on its various comparison services when a customer buys through the site.

GoCompare does not sell its customers’ data.

When it launched in 2006, it was the first comparison site to focus on displaying policy details rather than just listing prices, with the aim of helping people to make better-informed decisions when buying their insurance. GoCompare has remained dedicated to helping people choose the most appropriate products rather than just the cheapest, and has teamed up with Defaqto, the independent financial researcher, to integrate additional policy information into a number of its insurance comparison services. This allows people to compare up to an extra 30 features of cover.

GoCompare is the only comparison website to be invited to join the British Insurance Brokers’ Association (BIBA) and is authorised and regulated by the Financial Conduct Authority (FCA).

For more information visit www.gocompare.com and www.gocomparegroup.com

Contact Information

Louisa Marsden

Senior PR Executive

GoCompare

01633 655 132

louisa.marsden@gocompare.com