The cost of living crisis is increasing prices across the board and insurance is no exception, with premiums going up by substantial sums.
For instance, after years of falling, a report by Consumer Intelligence found that across the year to November 2022, the most competitive car insurance quotes rose by 17.4 per cent.
Which? is sharing its top tips to help consumers get cheaper insurance without having to compromise on cover.
1. Shop around and don’t automatically renew
The ban on the insurance ‘loyalty penalty’ at the beginning of 2022 brought an end to the era of exclusive new customer discounts – and this appears to have contributed to prices rising for some groups of customers.
Which? found that it’s worth shopping around when a policy is up for renewal. Half (48%) of Which? members who haggled in the first six months of 2022 made savings – on average £56 for car insurance and £54 for home insurance.
There are also likely to be savings available by switching providers. Drivers who didn’t haggle, but had changed car insurers were paying £43 less, on average, than those who remained with their original provider. Home insurance switchers were paying £103 less.
2. Search for cover on comparison sites
Be aware that some insurers set different prices depending on the method used to get a quote and some comparison sites also offer cash-saving incentives to entice customers.
For instance, when Which? checked in December 2022, Confused.com and MoneySuperMarket guaranteed beating customers’ current car or home insurer’s renewal offer or refunding the difference, as well as offering a £20 voucher. GoCompare offers free excess cover with car insurance. This reimburses up to £250 of the excess if you claim (excluding breakdown and glass damage).
In October 2022, Which? tested a quote for a 38-year-old Ford Focus Zetec driver and, adding a voluntary excess of £250, reduced the cheapest five quotes by between £55 and £58 – around 12 percent.
Not all insurers or policies feature on comparison websites, so it is also worth checking directly with the insurer.
3. Get the timing right
When you search for a new policy can affect the quote you receive. Generally, leaving it until the last minute means insurers are likely to charge more than if you purchased the cover a few weeks in advance of the cover starting.
The time of year can also affect your quotes. Which? analysed 33 months of car insurance premium data from Compare the Market (Jan 2020-Sept 2022), and found regular variations of as much as £50 in the average premium depending on the month you buy, with prices peaking in December and dropping between February and April.
4. Make sure the cover is adequate
Consider whether the cheapest policy you find will actually save you money in the long run. If a policy is cheap but comes with steep excesses or significant exclusions, it could actually cost you more if you have to claim. It is vital you check the policy details before buying the cover.
5. Make sure the cover fits you
When searching for insurance, it is important you choose a policy that fits your needs, and you’re not paying for extras you might not use or benefit from. It is possible to tailor a policy’s cover to suit your needs by changing the voluntary excess, as increasing it will reduce the premium. Make sure the ‘total’ excess (any compulsory excess plus the voluntary excess) is no higher than what you could afford to pay out for a claim.
6. Make sure the quote is accurate
Pay attention to questions asked when applying for insurance and check assumptions made about your circumstances when it is time to renew.
For example, if your daily commute to work during rush hour has changed you might be driving fewer miles each year. For home insurance, you may have made a change to your property – or the value of your insured contents might have changed.
Informing the insurer of any changes means you get a more accurate price – potentially saving you money.
7. Pay annually (if you can)
Paying insurance in monthly instalments might be a more expensive option overall. This is because you’re effectively borrowing the year’s premium to repay in instalments. This typically comes with interest – with rates of around 30 per cent APR not being uncommon – hiking the annual cost. So if you can afford it, pay annually instead.
8. Try a broker
Some people might find it difficult to find a policy that suits them, perhaps because of their age, the kind of house they live in, a medical condition, or various other circumstances that can make finding insurance difficult.
If you haven’t found a policy to suit your needs after searching online and via comparison sites, it could be worth trying a broker. A broker will find insurers, arrange cover, and can help with renewal and making a claim. They’re usually paid by commission.
Reena Sewraz, Which? Money Expert, said:
“With household budgets under huge strain at the moment, it’s important not to renew your insurance without first checking if you could pay less. We’ve found several ways that you can keep costs down.
“Haggling and switching remain effective ways of bringing down the cost of insurance. It’s important to shop around and compare the rates on offer, as there’s likely to be a great deal of variation between providers for insurance.”
Notes to editors:
- Over the coming months, Which? will be highlighting free and useful money-saving advice every Monday to help consumers manage the ongoing cost of living crisis. The series will cover a range of topics, from how to save money on household bills, to childcare and travel.
- 8 ways to get cheap insurance in 2023
- How to find cheap car insurance
- How to find cheap home insurance
Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.
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