Car Insurance Renewal Case Studies: How Much Extra You Pay

Millions of UK drivers pay more each year for their car insurance because they let their insurance policy renew by itself. This is known as the car insurance loyalty penalty. If you stay with your current insurer, you may spend a lot more money than if you look at other options and shop around.

This article looks at real-life car insurance renewal case studies. It shows how much extra people can end up paying and why this happens. You will also see what you can do to get a better deal on your car insurance.

What is a car insurance renewal case study?

A car insurance renewal case study looks at the difference between the renewal premium given to a customer who stays and the new price offered to someone who is a new customer. The study helps people see how much extra they may pay if they stick with the same car insurance over several years. It shows if there are hidden costs to loyalty and helps people know what to expect when they compare the renewal premium and new price.

The financial conduct authority (FCA) has set up new rules to help stop unfair price rises for renewals. Even with these changes, many drivers see the price of their premiums go up a lot from the previous year. This still happens when their driving details have not changed.

Real-life case studies: how much extra do loyal drivers pay?

Case Study 1: A loyal customer vs a new customer

Mrs A is 52 years old. She has not made any car insurance claims lately. She has stayed with the same car insurance company for seven years.

• Previous year’s premium: £480
• New renewal price: £590
• New customer quote (same insurer): £440

Even though she always drove safe, she was still paying more just because she stayed loyal to one company. By using a comparison site, she found a better deal. She soon got a £450 policy from another provider — this is a real better deal.

Case Study 2: Younger driver renewal inflation

Mr B is 19 years old. He wants to get car insurance for his small hatchback. He saw the cost go up a lot at the time of car insurance renewal.

• First-year premium: £1,850
• Renewal premium: £2,050
• New customer quote (same insurer): £1,600

As one of the younger drivers, he had to pay higher prices to get car insurance. He looked at a range of providers and found a deal that dropped the cost to £1,650. That save of £400 shows how renewal penalties affect people in higher risk groups more than others.

Case Study 3: Long-term loyal driver with no claims

Mr C is 45 years old. He has not made an insurance claim for 12 years. He thought that being loyal would give him some rewards.

• Previous year’s premium: £620
• Renewal premium: £710
• Best price on comparison sites: £525

Even though he did not make one claim, the cost of his insurance still went up. He chose to switch, and this helped him save £185. He also got a full breakdown of all the extras, like breakdown cover, that were included.

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Car insurance renewal quote comparison: key patterns

The table below shows that the price of your insurance can often go up if you do not look at other options or compare.

These examples show that things like car insurance claims and how much it costs to fix a car can make the cost of car insurance go up for everyone in the whole insurance industry. Big changes happening around the world can do this too. The people who already have car insurance and want to renew it feel this the most.

Why do renewal premiums keep rising?

Even though the FCA brought in new pricing rules to stop unfair price hikes, many people still see higher renewal premiums. This happens because there is a wide range of factors that affect the cost.

• Cost of claims: The cost of your insurance is going up because the cost of labour is higher. Car parts are more expensive now. Payouts for personal injury are also bigger.
• Vehicle thefts: There are more vehicle thefts now. This pushes up the full cost of this claim for many insurers.
• Expensive cars: Premiums go up when you have luxury cars. That is because it costs much more to repair them.
• Future claims modelling: Insurers look at the possible impact of future claims to set your price. It does not matter if you had no number of claims in the last 12 months.
• World events: World events like supply chain problems, inflation, and disasters all change the insurance market. These things also affect the price of your premiums.

The association of British insurers says that the whole insurance industry has seen big jumps in the total cost of all claims. This will usually make renewal quotes go up for people.

Switching success stories

Many drivers have stopped paying extra by checking prices from different companies.

• Mrs A brought her renewal premium down from £590 to £390. She did this by going to a different provider. She liked that they gave great service and showed all the renewal documents clearly.
• Mr B is 19 years old and saved £400 on his quote. He got this saving by not staying with his current insurer.
• Mr C ended up saving £185. He got a better deal and now gets free courtesy car cover too.

These stories from people who switched their car insurance show that staying with one company does not always help you. You can get better deals if you look around and change your plan. Many people save money when they compare prices instead of sticking with what they have. It is a good idea to check your car insurance every year to make sure you have a plan that is good for you. You might be surprised at what you find.

Electric cars and renewal penalties

Even people who own electric cars are not free from the loyalty penalty. Many who drive these cars have to pay high prices for cover. This is mainly because the cost of claims is high when it comes to battery changes and work that needs a specialist.

Example:

• A driver who had to pay £720 for their previous year’s premium on a £12,000 Nissan Leaf saw it go up to £860.
• A new price for the same car with another insurer was £670.

This shows that when more people get electric cars, the cost of car insurance can still go down. You can make this possible by looking at a range of providers and comparing the prices for electric cars.

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How much can drivers really save?

The average amount people save when they switch car insurance can be different for each person. It depends on the driver’s profile. Car insurance renewal case studies show this:

• A typical saving is between £125 and £250 each year.
• High-risk groups, like younger drivers, can save up to £500.
• People who own expensive cars may save about £300 when they compare.

Using online resources and comparison sites is the best way to find the right cover for you. These tools can help you get the best price, and make it easy to find what you need.

FAQ’s About Car Insurance Renewals