The price of car insurance loyalty: How much is auto-renewal costing you?
Alarming research from the UK shows consumers are paying through the nose for being loyal to their car insurer, with £1.3 billion ($2.55 billion AUD) lost due to policies automatically rolling over each year.
The same car insurance “loyalty tax” can be found in Australia, says Mozo’s Kirsty Lamont, with “drivers who fail to shop around at renewal time commonly hit with premium increases year after year.”
According to Lamont, insurers often entice customers with great introductory offers for the first year and then make their profits by hiking up their premiums in the following years.
“There’s no requirement for car insurers to tell you if your new premium is higher than the previous year’s. The onus is on customers to check, and unfortunately too many of us fall into the trap of letting our car insurance roll over, without getting a single quote from another provider."
“The bottom line is being loyal to your car insurer may not pay off,” adds Lamont.
Tips for avoiding the car insurance “loyalty tax”:
1. Check your auto-renewal notice carefully. When you receive your auto renewal notice, compare it with last year’s premium, to see if your insurer has upped the price on you. “If you do find they are edging up your premium, then you’ve been given good reason to look elsewhere,” says Lamont.
2. Compare your quote with the market. It’s common knowledge that the best deals are offered to new customers, so do your research using an online car insurance comparison tool to check what other insurers are offering. “All it takes is a few minutes and you could potentially save hundreds on your car insurance.”
3. Take out your insurance online. These days many insurers offer discounts to those that are willing to take out their insurance entirely online. The provider benefits from lower overhead costs like reduced calls to the call centre or in branch visits, and you benefit from a better deal.
To compare some of the top car insurance providers in Australia, visit our comparison section which clearly displays top car insurance deals and must know policy information to help you find the best value option.