Car Insurance and Auto-Renewal
Auto-renewal means your insurance company automatically renews your car insurance policy when it comes to the end of your fixed-term contract, usually for the same length of time as your current contract. Sounds nice, right? Wrong.
Whilst there can be some benefits to auto-renewal, in our experience you’re much better off not auto-renewing your policy. Read on to find out why.
In this guide:
- Best Deals for New Customers
- There’s No Loyalty in Car Insurance
- How do I know if my policy is set to auto-renewal?
- Why should I auto-renew my policy?
- Your Right to Cancel Your Auto-Renewal Policy
The car insurance market is highly competitive, and one way to guarantee more custom is to offer promotions and deals for new customers. In almost all instances, switching providers will save you money, and the best way to start is by using our car insurance comparison tool. You’ll be saving big bucks in no time.
Car insurance is simply too competitive a market that you won’t get a loyalty bonus, especially considering new insurance deals are cheaper than ever. Moreover, many drivers are finding their premiums actually increase year-on-year; perhaps the area stats have changed, or your own new customer deal has now expired – you may not even be aware of the changes to cost unless you read the small print and, until 2017, it wasn’t even law that insurance companies had to tell you about how your premium might change.
Oftentimes, auto-renewal can be the cause of complications. In some instances, drivers are not aware that their policy is set to auto-renewal and take out a new policy with another insurance provider. This leaves them with two insurance policies and the cost that goes with them. By the time the driver is aware that their old policy has auto-renewed, they may well be outside of the “cooling off period” (which we’ll talk a little more about later).
In other cases, drivers may believe that their policy will auto-renew at the end of their contract, but it doesn’t (perhaps this was the set-up with a previous provider they had and believed the same rules would apply). As an eventuality, they’ll be rendered uninsured and driving a vehicle without insurance which, in the UK, is illegal. Because insurance companies are different, with varying renewal policies, auto-renewal can cause confusion – and its drivers who pay the price.
We’ve outlined why we advise that you don’t set your policy to auto-renewal, but there are of course some reasons why people may still opt to.
Namely, it’s easy. There’s no doubt that it can be a headache looking for a new car insurance deal. There are a lot of terms and conditions to go through and comparisons which some may find a daunting and detailed task. It takes time which, let’s face it, is precious to all of us. Getting an auto-renewal policy is just easier.
Despite knowing that it doesn’t pay to be loyal, many people do choose to stay out of a sense of loyalty, or because they simply like the service provided. However, while it’s thought that the provider will continue to give them a good deal, this isn’t necessarily the case and the best deals always go to new customers.
Your insurance company should always contact you 14 days before the end of your contract expires, stating whether your policy is set to auto-renewal. They should also clearly outline any change to the cost of your premium.
If your policy is set to auto-renewal, you’ll need to let your insurance company know prior to the renewal date that you want to cancel it. If you decide later on that you want to cancel your policy, then you may find yourself having to pay more.
Most insurance companies will give you a 14-day period to cancel once your policy starts, known as a “cooling off” period. If you cancel within this time, you should only be charged an administration fee and the cost of your cover for those two weeks.
If you choose to cancel after this time, then, as with most contracts, you’ll be requested to pay off the rest of your contract. We don’t need a maths degree to tell you that this could be fairly uneconomical, counteracting any savings you might have made from switching insurance companies. So, just make sure you’re are aware of the terms and conditions when it comes to auto-renewal to get yourself the best car insurance deal.