It is always tempting to stay with the status quo, its was always tempting to do nothing when the notice that your insurance premium is going to automatically renewed. It is more than likely that the premium would increase and you would be none the wiser. However, when that insurance policy comes up for renewal one must always shop around for a better deal. Here is five ways on how.
1: According to moneysupermarket.com, people with home insurance throw out almost £37 million a year in auto-renewal. People with car insurance overpay an average of £113 annually. Stand alone mobile phone insurance often catches people out because it carries on for years unless you cancel it. One person found he had been paying insurance on his mobile phone, a Nokia 3100 he took in 2004, over a period of 11 years he has paid a total of £683.55.
2: Introduced in 2011, insurance auto-renewal made sure people did not drive illegally and because many mortgages are invalid without cover. Kevin Pratt from moneysupermarket.com says, “Since then it’s become an egregious way for companies to levy a tax on customer loyalty.” In December 2015 the Financial Conduct Authority (FCA) said it would launch a voluntary requirement for insurers to include last year’s premium with the new one of renewal letters. This will be introduced next year.
3: Many companies make it a hassle for customers to move elsewhere. Some insurers charge up to £50 of you if you switch to another insurer after receiving the auto-renewal premium even during the “cooling-off period”.
4: The Financial Ombudsman Service (FOS) gets a “significant” number of enquires from people who have has products automatically renewed. Matthew Allinson from the FOS says, “We have made it clear in our discussions with insurers that we do not consider ever-increasing premiums for loyal customers to be acceptable.”
5: How to fight back? When a premium comes for renewal, check if you could get a better deal on price-comparison websites. It may also serve you well to tell the insurer you are leaving, you might get a better deal by negotiating.
