Why car insurers ramp up premiums days before renewal
11:59AM BST 25 Jun 2013
Motorists face sharp hikes in their car insurance premiums if they wait until the day of renewal to update their policy.
New research from MoneySupermarket, a comparison website, shows that drivers pay £33 more if they buy their car insurance on the renewal date than if they shop around with more than two weeks to go on their policy.
A spokesman for MoneySupermarket said people who are short of time create a “perfect opportunity” for insurers to raise their prices.
Peter Harrison, car insurance expert at MoneySupermarket, said: “People have less choice when they shop [for car insurance] at the last minute. As you need to have insurance on the day of renewal, customers have to make a decision there and then, so it is a perfect opportunity for an insurer to increase premiums.”
He also said that those who renew their insurance at the last minute are seen as a “greater risk” by insurers, so they will price accordingly.
Mr Harrison said: “Those who renew their insurance at the last minute could be rushed in other habits as well. They could run late regularly and that could affect their driving. That is one reason they are seen as riskier by insurers and one reason they could find themselves paying more.”
The analysis of 13m quotes from motorists shopping for car insurance shows that with two weeks to go on a policy, motorists pay £434 on average on renewal.
This figure rises to an average of £452 during the final week of the policy and on the day of renewal the cost of cover jumps to £467 on average.
Almost 55pc of motorists delay renewing their car insurance until the week their policy is due to expire, while 18pc leave it until the day their policy lapses to renew, the research shows, leaving them vulnerable to price hikes.
Insurers tend to change their pricing daily, so planning ahead is key to making significant savings on your car insurance. Many insurers also lock in a quote for 30 days so motorists are free to shop around, although this time period does vary so be sure to check when you need to buy.