From car insurance to home cover and pet care, auto-renewals are standard practice. But is there a benefit to letting your insurance automatically continue, rather than shopping around?
There must be a logical reason why around 1 in 5 of us will let our current car insurance automatically continue? After all, UK drivers could be saving more than £1 billion per year, which equates to more than £100 each. Insurance companies will point out that auto-renewal prevents anyone from forgetting to continue their cover. That means you don’t have to worry about driving while uninsured, or having an issue with your home and being out of pocket.
A significant number of customers also say that they are happy to allow their cover to auto-renew because they have had a good experience with a past claim, or are loyal to their current companies.
But many people simply assume that because they’ve found the best deal in the past, that will continue, or that switching will be complicated.
The Risk of Auto-Renewal Insurance:
Unfortunately, many customers are paying far more for their renewal premiums than when they first took out a policy. While some companies do disclose the previous amount you paid, it is now law that from April 17 2017, your previous costs will have to be included with any renewal quote. That can help to highlight if your insurance has risen, despite the fact you should hopefully have an additional year without claims.
Even if your new premium is the same as last year, you could be missing out on savings. For example, the price of comprehensive car insurance has actually dropped over the last few years. So what may have been a good deal 12 months ago could now be an unnecessary expense.
Auto-renewal can also allow insurers to make changes to your policy which may go unnoticed. If you’re not paying attention to your renewal, you may find your previous cover has changed. And that may leave you at risk for things which you were previously insured for.
The problems aren’t all down to the insurance companies though. Too often we’re guilty of not keeping our insurers updated regarding changes of circumstances. Forcing yourself to shop around and be active about renewing your insurance means you’ll also remember to update companies about any change of address, convictions, or vehicle modifications.
One aspect people often forget is that the value of your insured possessions may change. Your vehicle will have depreciated over 12 months, and you may have bought expensive new purchases into your home. There’s no point in continuing to cover the cost of a brand new car after a few years, especially as an insurance evaluator will price it at the current market value in the event of an accident or theft.
Just Auto-Renewed? It’s Not Too Late
All insurance policies are subject to a 14 day cooling off period, during which time you can end the cover for any reason. It starts when the policy begins or when you receive the policy documents, whichever is later.
Some insurers offer a longer cooling off period, and life insurance is set at a minimum of 30 days. You will get a full refund of anything already paid, although your insurer may take a small amount to cover the time the policy was active and may also charge a small administration fee.
Outside the cooling off period, you can still cancel your policy. But this is usually subject to a cancellation fee which can be significant. That often makes it cheaper to wait until the next renewal period.
How To Save On Insurance Cover:
There are plenty of ways to save on your next insurance premium. The good news is that most of them are fairly quick and easy. And the savings can be substantial – sometimes multiple hundreds of pounds. If someone offered you £400 for 30 minutes work, you’d probably jump at the chance. And you can always use some of the savings to treat yourself as a reward for your efforts.
The first step is to make sure you act before your renewal comes into force. Although you can use the cooling off period, it’s cheaper to buy insurance further in advance.
You should get your renewal letter or email in the month before your insurance is due. But it’s quick and easy to put a date in your calendar for 2-3 weeks before you know your cover will need to be bought. That will give you plenty of time to get a new policy in place.
Shop around to check competitors and prices. Even if you would prefer to stay with your current insurer, it’s worth knowing what other deals are available. And many companies will provide a quote via various online comparison tools, so you don’t have to spend ages phoning around. That leaves a small number of insurers who don’t feature on those sites for you to contact individually.
If you’re happy with our current insurance company, make sure to negotiate with them. Phone them up and ask them to match the best deals you’ve researched. Even if they don’t become the cheapest option, they are likely to drop the renewal quote to at least be in a similar range. So nothing has to change, except the fact you’ll be paying less.
Check your payment options. If you can pay in one lump sum, you can save around 20% of the price of your insurance. And you may also find cashback deals available for specific insurance companies. Make sure you’ve thought about the cover you need, and the changes that may have occurred. It’s good to think about your average mileage and what excess you’re comfortable with before you’re on the phone.
Existing medical conditions are obviously important for travel and life insurance. But even circumstances like being in a relationship or co-habiting can lower your premium. And make sure you have adequate cover for the right amount for your car and possessions.It’s also worth thinking about any extras you might be offered. Many car insurance policies will include windscreen repairs. You’re also likely to be offered breakdown assistance or other incentives, so it’s worth thinking about before you make a decision.
Finally, check the small print. A long no-claims bonus can cut your costs and be worth protecting, but the definition can vary between insurance companies. And make sure you understand the administration fees, particularly if you plan on moving house or making modifications to your home or vehicle in the future. Your policy may be invalidated by making even a reasonably small change, so it’s worth checking in advance.
Ultimately, renewing your insurance should give you peace of mind for the next 12 months. And the best way to achieve that is to spend a little time on researching your options and considering any changes you need to make. Once you know what you want, it’s quick and simple to spend a few minutes online to gather your best options. So ultimately a couple of phone calls will be the most arduous task for you to potentially save hundreds of pounds a year.