Drivers urged to avoid auto-renewal mileage trap as insurance prices fall

Friday, 5th February 2021, 9:31 am
Updated Friday, 5th February 2021, 9:33 am

UK motorists are being urged to make sure they don’t overpay for their insurance in 2021 after data from the Association of British Insurers (ABI) showed a significant drop in costs.

Figures from the ABI showed that premiums fell to a four-year low in 2020 largely due to the effects of lockdown, dropping to an average £465 for fully comprehensive cover.

Strict travel restrictions around the country saw a dramatic decrease in traffic levels and an associated fall in the number of insurance claims, which helped push down premiums.

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However, motorists are being warned that they might not see the benefits of this reduction if they simply accept the renewal quote from their insurer. One expert estimates that auto-renewing could cost drivers more than £100 in overpayments.

It pays to shop around (Photo: Shutterstock)

Auto-renewals often don’t offer drivers the best deal but in another year where we can expect to drive far less than usual, industry experts are warning that drivers could end up paying even more over the odds if they don’t shop around.

Dan Hutson, head of motor insurance, comparethemarket.com, said: “With fewer cars on the road last year due to lockdowns, working from home and social distancing, premiums have fallen to their lowest level in years. This is welcome news for most households as budgets continue to be stretched. However, these savings are usually only available to drivers who shop around for the best deal at the end of their policy, with our research showing the difference between the average premium and the cheapest premium to be £104.”

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Florence Codjoe, car insurance expert at USwitch, added: “When applying for car insurance, motorists are always asked to provide the estimated number of miles they are set to drive throughout the year, which impacts the cost of your insurance.

"If your car insurance is due for renewal, it’s definitely worth recalculating your mileage based on the amount of time you’re set to spend at home in the coming months, especially if you’re working from home.

"Some insurers waivered cancellation or amendment fees during the national lockdown earlier this year, so it’s also worth checking with your provider if you can amend your policy free of charge and make a saving right now.”

Confused.com’s Louisa O'Shea said that some insurers were still increasing premiums for existing customers. She said: “We’re seeing some of the biggest car insurance savings for a long while [but] these savings are only being seen by those shopping around. We know from our research that insurers are still putting up renewal prices for some drivers. Even if the increase is small, please don’t settle for this as there will be an insurer out there willing to offer a better price. ”