Millions of drivers have been with the same car insurer for TEN YEARS – and may be overpaying hundreds of euros a year
- Many loyal auto insurance customers have been with the same company for a decade
- But insurers will not reward loyalty and increased prices annually until January 2022
- Even now, shopping around is the only way to get the best car insurance
Millions of motorists have been with the same car insurer for 10 years or more and are probably overpaying millions of pounds a year.
A sense of loyalty has led 2.1 million motorists, or 6 percent of all motorists, to stay with the same car insurer over the past decade, according to research by comparison website GoCompare.
But staying with the same insurer means drivers could be paying sky-high prices for their auto insurance – despite recent help from the financial regulator.
GoCompare discovered that the older generation is less likely to switch car insurance.
About 12 percent of the over-65s say they have been with the same car insurer for more than 10 years.
No Reward for Loyalty: Drivers who stay with one insurer are likely to pay too much, and this is especially true for motorists who haven’t shopped around before January 2022
Not switching car insurance costs drivers an additional £675 million each year in unnecessarily high premiums, according to rival comparison agency Compare The Market.
The GoCompare survey also found that a quarter (26 percent) of people stayed with the same insurer because of loyalty.
Of those age 65 and older, nearly half (47 percent) said loyalty was the reason they stayed with their insurer.
Almost one in five motorists (19 percent) have their car insurance automatically renewed with the same insurer, without shopping around. This group indicates that this is because they find switching difficult or difficult.
GoCompare auto insurance expert Ryan Fulthorpe said, “Those 2.1 million people could be missing out on not only financial savings, but improvements to their insurance coverage.”
Shop around to save money on car insurance
There is no substitute for motorists looking for the best car insurance prices.
Until January 2022, motorists had to pay much more for car insurance if they did not switch their insurer at the end of their 12-month term.
This insurance ‘loyalty penalty’ came about because insurers would normally offer new customers low prices to entice them to sign up, and make up the difference by charging loyal customers more.
But last January, the Financial Conduct Authority regulator banned the practice, saying insurers could no longer charge loyal customers more than new customers.
In practice, this has removed some of the incentive for drivers to shop around, as they don’t face the same steep price increases when their policy renews automatically.
But a driver’s current insurer may not be nearly the cheapest on the market, which means shopping around is still the best course of action.
Fulthorpe added: ‘While the General Insurance Pricing Practices introduced last year by the Financial Conduct Authority are now in effect, they only protect the price a director would have from the same provider, by ensuring that a renewal price is the same price that a new customer with the same risks would receive.
“By not shopping, drivers do not allow other insurers to assess their risks and offer insurance.”