Yahoo Finance Failure to switch car insurance cost Brits £720m in 2020
The 17.1 million drivers that auto-renewed their car insurance last year in the UK collectively spent an extra £720m ($1m) last year.
That's according to MoneySuperMarket, which found a 7% increase from 2019, when drivers were hit with a £674m complacency charge.
Loyalty to car insurance providers leads to an average price increase of £42 a year for British drivers, the research found.
One in five saw jumps between £26 and £50, while one in 10 saw rises between £51 and £75 (9%) and £76 and £100 (8%).
Nearly one in 10 (8%) drivers allow their insurance to renew automatically without shopping around for a cheaper deal, with a fifth (20%) staying with their existing provider for ease. A tenth (12%) believe changing car insurance provider is too much time or effort, and a further tenth (13%) do not believe there are significant savings to be made.
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The Financial Conduct Authority’s (FCA) transparency in insurance renewals rules that came into force in 2017 are intended to encourage drivers to shop around by highlighting, in a prominent manner, their previous year’s premium price against their renewal price, alerting drivers to any increase or decrease.
Despite this, half (51%) of drivers do not recall seeing these notifications. Of the remaining half (49%) that did see the notifications, a third (31%) said that they did not encourage them to shop around.
MoneySuperMarket’s research also shows that the cost of an average premium decreased by 3% year-on-year — from £503 in Q4 2019 to £490 in Q4 2020. However, premiums actually increased by 3.65% from £473 in Q3 to £490 in Q4 of 2020.
Residents of East London had the most expensive premiums in Q4 2020 (£955) – over double the UK average. London as a whole had an average premium of £690, compared with £330 in the South West. Kirkwall in Scotland (£269) had the cheapest premiums in the UK.
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Kate Devine, car insurance expert at MoneySuperMarket, said: “Letting your car insurance auto-renew almost always sees you end up paying more, with our research showing that the average premium increase last year was £42. While it’s great to see that many of us are shopping around for a better deal, the number of people allowing their policy to auto-renew is still high at 41%.
“If your policy is coming up for renewal, you should always shop around to see what deals are on the market – a new deal on your car insurance is very easy to find online and could save you up to £218.”
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