Millions of drivers have stayed with the same car insurer for TEN YEARS – and may be paying hundreds of pounds a year
- Many loyal auto insurance customers have been with the same company for a decade
- But insurers don’t reward loyalty and raise prices every year until January 2022
- Even now, shopping around is the only way to get the best car insurance deal.
Millions of drivers have been with the same car insurer for 10 years or more – and are likely to overpay millions of pounds a year.
A sense of loyalty has held 2.1 million drivers, or 6% of all motorists, with the same auto insurer over the past decade, according to research by comparison website GoCompare.
But staying with the same insurer means drivers can pay hugely inflated prices for their car insurance – despite recent help from the financial regulator.
GoCompare found that the older generation is less likely to switch car insurance.
About 12% of people aged 65 or older said they had been with the same car insurer for more than 10 years.
No loyalty rewards: Drivers who stay with one insurer are likely to overpay, and this is especially true for motorists who didn’t shop until January 2022
Not switching car insurance is costing drivers an extra £675m every year in unnecessarily high premiums, according to rival comparison firm Compare The Market.
The GoCompare study also found that a quarter (26%) of people stayed with the same insurer because of their loyalty.
For those aged 65 and over, almost half (47%) said loyalty was the reason they remained loyal to their insurer.
Nearly one in five drivers (19 per cent) let their auto insurance renew automatically with the same insurer, without shopping around. This group says it’s because they found the change to be complicated or difficult to make.
GoCompare car insurance expert Ryan Fulthorpe said: “These 2.1 million people could lose out not only in financial savings, but also in improvements to their insurance coverage.”
Shop around to save money on car insurance
There’s no substitute for shopping for drivers who want the best deals on car insurance.
Until January 2022, drivers had to pay significantly more for their car insurance if they did not leave their insurer at the end of their 12-month term.
This insurance “loyalty penalty” arose because insurers normally offered new customers low prices to entice them to sign up, and made up the difference by charging repeat customers more.
But last January, regulator the Financial Conduct Authority banned the practice, saying insurers could no longer charge loyal customers more than new ones.
In practice, this has removed some of the incentive for drivers to shop around, as they won’t face the same steep price increases when their policy automatically renews.
But a driver’s current insurer may not be the cheapest on the market, which means shopping around is always the best bet.
Fulthorpe added: “Although the general insurance pricing practices introduced by the Financial Conduct Authority last year are now in place, they only protect the price a driver would have from the same provider, ensuring that a price renewal is the same price that a new customer with the same risks would receive.
“By not shopping, drivers are not allowing other insurers to assess their risk and offer an insurance policy.”
