Drivers Are At Risk Of Paying A Loyalty Tax On Their Car Insurance

Motorists who leave their car-insurance on auto-renew are at risk of losing hundreds of pounds via a so-called loyalty tax…

Car Insurance and Loyalty Tax

It’s often the case that, if consumers stick with a given company, they’re rewarded; usually with discounts. That’s not the case with car insurance industry. In fact, car insurance providers regularly take advantage of their long-term customers by raising their premiums. As a result, drivers who leave their car insurance on auto-renew, effectively, face a loyalty tax. On average, this can cost a motorist up to £289 a year. Recent research has revealed that auto-renewals have increased by 40% since March alone; the highest level since 2017.

As a result of all this, GoCompare is urging some 6.7% million drivers at risk of paying a loyalty tax to shop around. Lee Griffin, CEO and founder of GoCompare, said “our research shows that millions of drivers are not actively engaging with the renewal process this year, potentially leaving themselves hundreds of pounds out of pocket by effectively paying a ‘loyalty tax”. He added, “we know insurers are helping those in extreme financial difficulty and, in these circumstances, it could be in the insured’s interest to remain with their current provider. But drivers who are still paying their premiums really need to shop around this year to see what other insurers are willing to offer them”.

Getting A Better Deal 

When ever your car insurance cover is coming up to its renewal date, it’s crucial to shop around. Within an hour or so, it’s perfectly possible to secure a diverse range of quotes. You can then opt for which ever is cheapest and most suitable for your driving. Just make sure to read any small print; you’ll want an appropriate amount of mileage, no penalties, exclusions or excess charges. It might always be worth notifying your current provider of cheaper quotes, too – as they may offer you a better deal. That’s the best of both worlds. A cheaper quote and without any real effort on your part.

Griffin did mention that some providers are letting their customers know that they’ll be facing cheaper premiums at the point of renewal; this is probably due to the massive drop in the number of claims being made over the course of lockdown. However, he’s stressed that this is probably a sign that you can get a better deal elsewhere. Another reason to shop around no matter what you’re offered.

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