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WHEN the letter from our car insurer landed on our doorstep last week, I immediately sprung into action – just like I do every year.
The insurer wants to renew our policy for £634 a year, down from £768 last year.
However, a quick check on comparison site Compare the Market shows the same insurer offers a policy for an even lower £576.
My husband gives them a call and after just five minutes, our renewal price is suddenly dropped to just £544 for the same policy as last year.
All we needed to do was explain where we had seen the cheaper deal and threaten to leave for another insurer if it couldn’t match the better price.
It’s the same saga with our insurance providers every year – and it works 99% of the time.
It comes more than three years after the Financial Conduct Authority introduced its loyalty penalty ban in 2022.
Under the rules, when existing home and car insurance customers renew their policy, the price charged can’t be more expensive than the price they charge an equivalent new customer for the equivalent policy.
However, a loophole in the rules allow insurers to give renewal quotes that aren’t always the cheapest they can offer.
Insurers can charge different prices based on how you pay – for example, customers renewing a policy over the phone might be able to get a better deal than if they purchase online.
Plus, they can also reserve their best prices for customers who negotiate.
In other words, the onus is on you to pick up the phone.
They will not offer you their best deal unless you ask.
Last year, 23.6% of 4,000 UK respondents renewed their car insurance premiums without shopping around, according to GlobalData 2024 UK Insurance Consumer Survey.
Meanwhile, 43.4% shopped around but ultimately renewed and 29.2% switched to a new insurer.
And it’s saving them serious cash.
In July this year, consumer group Which? found motorists managed to knock over £200 off their renewal quotes simply by haggling.
Sam Richardson, deputy editor of Which? Money, said three in five (61%) of those who contacted their insurer got a reduction to the original price offered.
Rhydian Jones, car insurance expert at Confused.com, added: “Car insurance prices have dropped by £144 on average over the past year, but many drivers still aren’t seeing those savings – in fact nearly half (49%) are facing higher renewals.
“That’s why it’s so important to consider switching or negotiating at renewal.
“It all starts with shopping around, it’s the only way to know if the price you’re being offered is the best available to you.
“Even if your renewal quote looks reasonable, it might still be overpriced in today’s market.
“Taking the time to research your options and not being afraid to question or negotiate your renewal can lead to real savings at a time when every penny counts.
An FCA spokesperson said: “We always encourage people to shop around and to negotiate.
“Insurers can offer discounts to renewing customers but must make sure they provide fair value to everyone.
“While we don’t set prices, we’ve acted to protect customers where we’ve seen they’re not getting a fair deal on their insurance”.
How to haggle over the phone
- If your insurer has increased its renewal price, ask it to justify the increase.
- Then point out the lower prices you have found elsewhere, and ask your insurer if it can better those offers.
- If it is not able to provide a better quote, state that you are willing to go elsewhere. If you have been a loyal customer for many years, it could be worth mentioning this.
- If the insurer is not budging much on the premium but you would still like to stick with your provider, one option could be to ask for an add-on (such as breakdown cover) to be thrown in. Just make sure that it is worth it.
Other ways to cut your car insurance premium
Pay upfront
Many insurers charge extra fees for monthly payment plans.
These can vary, but might include set-up fees, transaction charges or interest for spreading the cost over several months.
By paying annually, you can avoid these extra costs and keep more money in your pocket.
Drivers can typically save up to £59 by paying for their annual car insurance premium in one lump sum, according to Which?.
Tweak your job title
Certain jobs are seen as riskier than others for insurance purposes.
Small but accurate changes to your job title can slash your premium.
For example, swapping your role from “chef” to “caterer” can save you £113, MoneySupermarket has found.
And changing from “car dealer” to “motor dealer” could save you £310.
It’s important not to lie about your job though as it could invalidate your policy, so make sure any tweaks are legitimate and accurate.
Save the date
Renewing your car insurance sooner rather than later could save you some cash.
New cover becomes more expensive the closer you get to renewal. You can buy your insurance up to 29 days before the policy start date and “lock in” the price you are quoted that day.
Aypical driver can save up to £150 by buying new cover at least 26 days before their current policy ends, according to GoCompare.
Increase your excess
Your excess is what you agree to pay each time you need to make a claim on your policy.
When setting up, you can usually choose your own excess, which can be as low as £100 and as high as £500 or more.
The higher your excess, the lower your premium and vice versa. This means you could lower the cost of your insurance by agreeing to pay more if you need to make a claim.
But before you hike your excess, make sure you would be able to afford it if necessary.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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