Home insurers hiking prices for loyal customers
Consumers who auto-renew will pay £32 extra per year.
Home insurance companies are adding an average of £32 extra per year on to premiums for consumers who auto-renew, new research has shown.
This is in spite of the fact the home insurance companies have been bringing prices down over the past few years. The average policy in the UK is now £118 per year, and the customers who shop around can save an estimated average of £43.
Insurers rely on consumers not actively switching their policies when they come to an end. This means that they can increase the price each year, so their existing customers who stay loyal end up paying far more than newcomers.
The research shows that 26.8% of home insurance customers let their most recent policy automatically renew and didn’t switch insurance firm.
Of these people, 45.8% had their premiums increase as a result. But by switching they might have been able to save around 40% from their yearly bill.
In this study, 2,000 adults were asked about their home insurance policy. 34.7% said the they stuck with their current provider simply because they looked at the price and thought it seemed reasonable.
Another 34.7% said they did look around to see if they could find a different deal but weren’t able to, 8% said that they wanted to stay with their insurer, and 7% said it was too much effort to shop around.
Wales was the region in the UK where people are most likely to just stick with their provider. 40.6% surveyed stayed with their current firm. Those in Yorkshire and Humber were the most likely to try and find a better deal, with only 18% auto-renewing.
The average cost in the UK of combined buildings and contents insurance has stayed stable for the last year, at an average of £118. This is a big decrease since 2013, where premiums were an average of £140.
Despite these price decreases, the loyalty penalties that customers deal with mean many are losing money instead of making savings. This new survey estimates the gap between new and longstanding customers to be at £43 but Citizens Advice says it could be as much as £110.
The Association of British Insurers and the British Insurance Brokers’ Association published a list of action points that they want insurance firms to follow to stop the current trend of loyal consumers paying much more than new ones.
These points will apply to insurance policies that are 10 months or longer, and will include home, car and travel insurance — but not pet or health insurance.
Whilst these rules could help customers get better deals on their home insurance, for now it is important to make sure that you find the right policy and shop around to get the best price.
Use a price comparison website like A Spokesman Said to find the best home insurance cover for you. Don’t waste money by letting your insurer auto-renew your policy.
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