Car insurance firms use loopholes to keep costs high for loyal customers | Car insurance

Car insurance premiums for renewing customers are up to double the value quoted to new ones regardless of a latest ban on loyalty penalties, in accordance to motorists who’ve contacted Guardian Money.

One buyer was knowledgeable that his renewal premium can be £368.74 however related cover with the identical agency was quoted at £215.22 on a worth comparability web site. When he complained his renewal worth was revised down to £245.

Since 1 January, insurers have been banned from overcharging loyal policyholders so as to fund reductions to appeal to new customers. According to the Financial Conduct Authority (FCA), which carried out the ban, 6 million customers who stayed with their supplier overpaid £1.2bn in 2018. It estimates that the brand new guidelines will save shoppers £4.2bn over 10 years.

Marin Lewis
The founding father of MoneySavingExpert, Martin Lewis, says ‘it’s robust to pin down if insurers are taking part in video games’. Photograph: Antonio Olmos/The Guardian

However, shoppers who assume that the ban permits them to put their ft up with out paying a worth could also be in for a shock. Loopholes within the new guidelines imply they might nonetheless find yourself spending extra to renew an present coverage than to purchase a brand new one from the identical supplier. Companies are nonetheless allowed to discriminate between new and present customers relying on when and the way they apply for a quote.

Martin Lewis, the founding father of MoneySavingExpert, says that whereas some loyal shoppers will save money thanks to the brand new guidelines, they might battle to work out if they’re being charged pretty. “The [loopholes] mean there is wriggle room in the system, so it’s tough to pin down if insurers are playing games,” he says.

A spokesperson for the FCA says shoppers ought to nonetheless store round. They added: “We are using a range of tools to assess firms’ compliance, including thorough analysis of reporting data from firms, as well as consumer and market intelligence.”

There are a number of hidden elements that may enhance the value for new and present customers.

The ‘channel’

Car Insurance Renewal Reminder Circled On A Calendar
Firms are nonetheless allowed to discriminate between new and present customers relying on when and the way they apply for a quote. Photograph: Kevin Wheal/Alamy

This is jargon for what methodology you use to apply for a quote. A channel could be a name centre, walk-in premises, the insurer’s web site or a worth comparability web site. Insurers solely have to make sure that a renewal premium matches that quoted for a brand new buyer in the event that they apply for a like-for-like coverage by way of the identical channel the prevailing buyer used.

If the renewing buyer signed up by way of a name centre or the insurer’s web site, their premium remains to be probably to value greater than the identical coverage offered by way of a comparability web site. Firms are allowed to provide completely different charges to customers relying on which of the numerous comparability websites they use. This signifies that a shopper who took out automotive insurance by way of Moneysupermarket three years in the past will be charged extra to renew than a brand new buyer shopping for the identical coverage on To guarantee a renewal quote is truthful, you’ll have to bear in mind the way you initially got here by the coverage and test the costs for new customers on the identical channel.

The date

The worth match solely applies to new quotes issued on the identical day {that a} renewal quote is generated. It is information to many shoppers that premiums can fluctuate for new and present customers relying on the date and the time of day they search for a quote. Typically, premiums rise the nearer it will get to the date you need cover to begin. That is as a result of insurers reckon that those that fly by the seat of their pants is perhaps riskier on the highway.

Retro alarm clock
The time of day that you simply use search engines like google could make a giant distinction to automotive insurance quotes. Photograph: StephanieFrey/Getty Images/iStockphoto

However, early birds can also be shortchanged. A 2019 survey by MoneySavingExpert discovered that customers who renewed on the earliest doable second, normally 30 days earlier than their coverage expired, paid a median of £388 a year greater than those that waited every week. According to the web site, 24 days earlier than renewal is the optimum time for a cut price and will prevent nearly 40%.

The time

The time of day that you simply hit the various search engines might make a three-figure worth distinction. Prices rise and fall in accordance to the quantity and demographic of people that have utilized for quotes that day. If a company has simply signed up a number of new drivers, it might increase the value for different new drivers to deter them.

Evening searches have a tendency to yield costlier quotes than early morning searches and evening owls in search of offers within the small hours might find yourself lots of of kilos out of pocket as they might be perceived as wild-living insomniacs who’re a danger behind the wheel.


The FCA guidelines apply to like-for-like insurance policies. Some loyal customers might accrue unrequested add-ons over time with out even realising it, and these are in the end mirrored within the renewal worth. Check your present coverage to see whether or not perks resembling driving overseas, personal accident and tools cover are vital to you earlier than evaluating the quote on-line.

Other methods

The worth of a premium is usually based mostly on apparently random elements, and some tweaks to an application might convey it down. Younger drivers, for occasion, might typically profit by including an older driver to their coverage. Insurers might take fright at some job titles however not different descriptions of the identical function. One reader was quoted extra when he selected dental surgeon from a dropdown menu than when he had described himself as a dentist, whereas illustrators appear to be thought-about much less dangerous than artists.

Lastly, ensure you are on the electoral roll. Insurers have a tendency to use this for ID checking and in case your absence makes that job more durable they may cost you for it within the quote they offer.

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