Loyal car insurance customers are being ripped off
Loyalty is a mug's game - just ask any good divorce lawyer.
But seriously, if you are a loyal car insurance customer you are almost definitely being ripped off.
It has emerged that British drivers are being overcharged by £2.4 billion for motor insurance after accepting high premiums, according to research published in The Times.
Drivers paid an average of £109 per vehicle more than they needed to, with the difference far wider for younger drivers facing the highest bills, a study found. It is believed that up to 58 per cent of motorists fail to shop around even if far lower prices are available.
This is why it always pays to go to a price comparison website to find the best deals.
The research suggested that the gap was fuelled by motorists who allowed policies to renew automatically, with loyal customers hit by far higher prices than those who switched provider.
Rules introduced by the Financial Conduct Authority in 2017 require all motor insurance companies to show the price of the previous year’s premium on renewal notices so that drivers can see the scale of the increase. However, it is claimed that most motorists are still prepared to accept more expensive premiums than they need to.
The conclusions come despite an overall decline in the headline cost of motor insurance in the past 12 months.
The study by the price comparison website Comparethemarket showed that the average premium in the three months to the end of September stood at £707. This represented a decline of 3.3 per cent or £24 compared with a year earlier. It reverses years of rising bills.
The study said that the drop coincided with a reduction in the number of new cars being registered, with sales declining by 3.4 per cent since the start of the year because of a weakening economy and concerns over extra charges on diesel vehicles. It suggests that insurers are dropping prices in the face of increased competition for customers.
Researchers found that the difference between average and cheapest prices stood at £109 in the last quarter: £598 compared with £707. For motorists aged 17 to 24 the difference between average and cheapest premiums was much higher at £226, suggesting they benefit even more by shopping around.
Dan Hutson, head of motor insurance at the website, said: “As the number of cars coming on the road reduces, it is expected that insurers will have to compete on price to attract customers from a smaller pool of motorists . . . Premiums are falling which, after years of rising prices, is extremely welcome news. However, there is the chance that this apparent positive could be a wolf in sheep’s clothing if it begins to discourage consumers from shopping around.”
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When did you last switch your car insurance provider?
Last year 65% of customers didn't switch their car insurance to try and get a better deal.