Monday moneyvator: Don’t fall for the car insurance “loyalty discount”

Monday moneyvator: Don’t fall for the car insurance “loyalty discount”

Having written in the personal finance space for some time now, I’m all too familiar with the car insurance auto-renewal ripoff, where your insurer hikes up the price of your premium each year.

But it wasn’t until recently I personally witnessed how real this ripoff was. Let me run you through what happened:

I bought my friends car around a year ago and she emailed me to let me know she had received an auto-renewal notice for the car and that since she had been with the insurer for 11 years she was offered a membership discount.

She was passing this onto me, thinking that she was doing me a favour, as perhaps the insurer would pass this “loyalty discount” onto me, the new car owner.

All too familiar with the auto-renewal rip-off, I decided to call the insurer to see if what was offered really was a discount, or actually a loyalty tax in disguise. Unsurprisingly, after asking for a quote for new customers using the exact same details (e.g postcode, age, driving history) the premium was $70 less. As you’ve probably guessed I decided to look elsewhere…

So if you’ve recently received your auto-renewal notice, consider these two factors before you let it roll over:

1. Are you being charged more than last year?

There’s a reason you took out your cover with that insurer in the first place, as at the time they probably lured you in with a low premium. But what can happen is after that first year comes to an end, your insurer might roll you over to a new standard policy, which often has a much higher price tag attached. So take the time to dig out last year’s statement to see if your car insurer is slowly creeping up your premium on you.

2. What are other car insurers offering?

Even if they’ve only hiked up your premium slightly, it’s still worth checking that the auto-renewal quote you’ve been given is on par with what other insurers are offering in the market to new customers. If you do find the grass is greener on the other side and decide to switch, consider taking out your insurance online, as many car insurers offer a discount of up to 25% for those click-savvy individuals.

Want to compare your auto-renewal notice with the market? Visit Mozo’s car insurance comparison hub, which does the hard work for you by pulling a range of deals into the one place.

Monday moneyvator: Don’t fall for the car insurance “loyalty discount” was last modified: July 25, 2016 by Rebeccah Elley

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