Everything you need to know about car insurance auto renewals

Jump to information on:

What does auto-renewal mean?

Will my car insurance automatically renew?

How has the auto renewals process changed over the years?

Why do insurance firms auto-renew policies

What are the benefits of auto-renewing?

Simple tips for keeping the same cover for less

FAQs about auto-renewals

What does auto-renewal mean?

Having an auto-renewal policy on your car insurance means that when your cover ends, your insurance provider automatically renews it for another year. Depending on whether you paid annually or monthly, you can expect a payment to be taken on your behalf.

How has the auto renewals process changed over the years?

A report by the Citizens Advice Bureau in 2018 illustrated that loyalty doesn’t always pay: the average household is being overcharged by £877 a year – about 3% of its annual household budget – because it sticks with the same providers for insurance and other services such as mobile contracts.

In fact, the Financial Conduct Authority (FCA) estimated that around six million insurance policyholders are not getting a good deal on their insurance, and if they all switched, they could collectively save around £1.2 billion a year.

In 2022 The FCA introduced new rules to help reduce some of these additional costs. If your policy is automatically renewing and it has had no claims or activity, your insurer must only charge you the same amount or less than they would for a new customer who needs a similar policy.

However, policyholders could still be missing out on finding a cheaper policy every year. It’s recommended that motorists compare policies themselves if they want to find cheaper insurance.

Why do insurance firms auto-renew policies

Many car insurance providers in the UK auto-renew their policies unless the policyholder opts out of the renewal, and in many ways it’s actually in the policyholder’s own interests for them to do this, because it ensures the motorist will never run the risk of driving without insurance.

What are the benefits of auto-renewing?

Renewal quotes are often higher than introductory rates, but the penalty for driving without insurance is much steeper. The fine ranges from £300 to an unlimited amount if the case goes to court, alongside six penalty points on the driver’s license, which could increase future premiums. Additionally, there’s a risk of disqualification from driving if the case goes to court.

Of course, even though auto-renewal can help drivers stay on the right side of the law the higher renewal quotes can sometimes be a bitter pill to swallow. Insurance providers often offer policyholders a discounted introductory rate in their first year, which is why subsequent renewal quotes can feel so costly.

Beyond car insurance, some insurance policies that aren’t legally required might also auto-renew at the end of the term, such as home insurance, pet insurance and even annual travel insurance.

No matter what type of insurance you need, though, it’s always a good idea to shop around for the best quotes rather than automatically accepting this renewal quote.

Many are still unaware of the benefits of shopping around

Even though many insurance policies include a clause that allows the insurance provider to automatically renew the policy unless the policyholder opts out of the renewal, there is never an obligation to stick with any one provider and indeed 35% of respondents – for both home and motor insurance – reported to the FCA that they had switched their policy.

This leaves 65% of policyholders who demonstrated an unwillingness to move from their existing insurance provider, either because they are unaware that they aren’t obliged to accept that provider’s renewal quote, or simply because they are unaware of the potential benefits of shopping around.

Simple tips for keeping the same cover for less

So, what should you bear in mind if you’re keen to save on your insurance outgoings without compromising the protection you enjoy?

It’s a highly competitive market

The FCA points out that over half of motor and home insurance consumers don’t appreciate this. You’re not tied to any provider and should consider the options you have. You’re in a position of power.

It pays to negotiate

The FCA found that just 25% of respondents taking out home insurance and 31% taking out motor insurance said that they contacted their providers and tried to negotiate a lower price. 60% of these policyholders indicated that they succeeded, and for the same level of cover and excess.

It’s easy to shop around for the best deals

Shopping around doesn’t have to be difficult. Price comparison websites such as Quotezone.co.uk are a quick and easy way to compare policies from hundreds of providers in a matter of minutes.

Your timing matters 

When it comes to renewing your insurance, timing can make all the difference. The best time to renew is usually around three weeks before your existing policy expires, because around that time, there is usually a definite dip in quoted premiums.

Of course, price isn’t the only deciding factor, and you might have good reasons for sticking with a provider even if they aren’t the cheapest. For instance, many people like the reassurance of remaining with well-known or award-winning brands. And don’t underestimate the power of great customer service – people who have positive experiences and feel looked after are likely to bear that in mind when it comes time to renew.

However, even if you aren’t planning to switch, it still makes sense to compare policies from a range of different providers, because when you’re armed with all the right information, you’re more likely to get the right policy at a fair price.

Quotezone.co.ukis one of the UK’s leading insurance comparison websites. Launched in 2005, Quotezone.co.uk now helps millions of people find better deals on their insurance each year.

This article is intended as generic information only and is not intended to apply to anybody’s specific circumstances, demands or needs. The views expressed are not intended to provide any financial service or to give any recommendation or advice. Products and services are only mentioned for illustrative rather than promotional purposes.