British drivers are overspending on their car insurance by a collective £720 million a year despite legal changes designed to help them save cash.
Analysis of insurance data from 2020 shows that an estimated 17.1m motorists potentially paid over the odds for their policy, with the overspend reaching as much as £100 in some cases.
The average insurance premium currently stands at around £490 - a decrease of three per cent over the last 12 months. However, for the 41 per cent of drivers who allowed their policy to auto-renew, costs jumped seven per cent, equivalent to an average increase of £42.
According to figures gathered by MoneySuperMarket, two-fifths of drivers simply allowed their car insurance to auto-renew, despite the potential savings to be found elsewhere. Among the reasons for not shopping around included the ease of sticking with the same insurer and a belief that the savings are not significant.
In 2017 the Financial Conduct Authority introduced new rules which require insurers to include the previous year’s price in any renewal quote so drivers can quickly see if their premium has increased. However, half (51 per cent) of drivers questioned by MoneySuperMarket said they didn’t recall seeing the notification and of those who did, almost a third (31 per cent) said it didn’t encourage them to shop around.
Kate Devine, car insurance expert at MoneySuperMarket, commented: “Letting your car insurance auto-renew almost always sees you end up paying more, with our research showing that the average premium increase last year was £42. While it’s great to see that many of us are shopping around for a better deal, the number of people allowing their policy to auto-renew is still high at 41 per cent.
“If your policy is coming up for renewal, you should always shop around to see what deals are on the market - a new deal on your car insurance could save you up to £218.”
The data also revealed the cheapest and most expensive locations around the country for insurance. Drivers in the south-west of England enjoyed the lowest premiums, at £330 for fully comprehensive cover, followed by those in Scotland (£377) and Wales (£397). Drivers in east London paid the most, with an average policy cost of £955 and drivers across London paid nearly 50 per cent above the national average with an average bill of £690.
Cheapest regions for car insurance in the UK:
|Region||Q4 2020 cost|
|9||Yorkshire & the Humber||£526|