Eye-Watering Insurance Renewals?

Anyone who has renewed their home or car insurance in recent months may have noticed substantial increases in the cost; doubling in the level of premium is not uncommon, even if a claim has not been made. There are genuine reasons for this; notably the cost of car parts and building materials has increased for repairs, economic uncertainty and more volatile weather has led to increased claims and the severity of those claims. Therefore, whilst some increases are inevitable, many insurers have substantially inflated renewal quotes despite the FCA banning renewal prices being inflated in comparison to brand new quotes. The ‘loyalty penalty’ or cost of inertia should therefore have been removed. However, Direct Line and the brands under their umbrella (Churchill and Privilege) were caught out by this in 2023 and should be refunding £30 million to customers for overcharging.

Assuming the insurers are following the rules, there are still a number opportunities to potentially lower your costs. Firstly, always do a comparison quote. There are a multitude of free comparison websites that can be used to check if your renewal quote is competitive. Many of these sites will have ‘perks’ such as cinema tickets for taking out insurance via their site. A brief questionnaire must be completed but this should only take a few minutes if you have all your policy details ready.

Secondly, always ring your existing provider to ‘haggle.’ This applies not only to insurance but also for satellite TV, energy, water and many other subscriptions. A simple phone call can often slash the renewal price quoted. Cases of the renewal price being halved by querying it abound. If you are armed with a cheaper comparison quote then even better – the existing provider will often (closely) match as they are aware price is usually the key factor in a customer’s decision on to insure with.

Thirdly, check if there is anything you can change on your policy to lower the cost. For car insurance, adjusting the mileage (up or down), amending the excess amount, or adding a named driver are examples but not an exhaustive list of things that can lower the premium. However, it goes without saying, do not make false statements and make sure the conditions of the contract meet your needs.

Lastly, being organised and proactive can significantly reduce the cost of insurance. Do not wait until the last minute to do a comparison quote and arrange cover. Data collected through Martin Lewis’ Money Saving Expert comparison site shows if you can quote (often before your renewal quote arrives) several weeks before your renewal date then this can lead to significant savings. For car insurance, the optimum time is 23 days before renewal and for home insurance it is 21 days before renewal. In short, being proactive and organised shows the insurer you are a more diligent and careful person. This statistically means you are less likely to make a claim. Whilst this might appear bizarre at first, if you think about it logically for a minute then there is some sense in this… which clearly the actuaries have done their best job!

So, what are the To Dos?

1. Make a note in your calendar of when your renewals are due.

2. Count back 21-23 days.

3. Block out 30 minutes in the period 3 weeks before the deadline to organise getting some renewal quotes.

4. Phone your existing provider.

Best of luck – this may save you thousands.