Don’t allow your insurance policies to auto-renew

With inflation hitting 20-year highs, the incentive to shop around has never been more compelling

Our tendency to look around for better deals on our big yearly expenditures appears to be different depending on the product. Picture: iStock

A new survey finds that while a slim majority of us shop around for car insurance, only half do the same for home insurance, while barely four in 10 look for a better electricity and gas deal.

Now that inflation is hitting a 20-year high, the incentive to shop around has never been more compelling.

The CSO reported last month that inflation stood at 5.5% in December, driven higher by fuel, food, and accommodation price increases.

It’s the same story everywhere. Eurozone inflation hit 5% in November, which is also a record, and worryingly, was well ahead of analysts’ expectations of 4.7%.

In Britain, inflation reached 30-year high in the final months of 2021, while US monetary authorities are grappling with a December inflation rate of 7%, the highest since 1982.

And yet a survey of 1,000 respondents, carried out by insurance provider Peopl.ie, suggests that consumer inertia continues.

Peopl.ie CEO Paul Walsh says that our tendency to look around for better deals on our big yearly expenditures appears to be different depending on the product.

“While 68% of people shopping around for their annual car insurance might seem on the face of it a good statistic, we would question what the other 32% are doing — if they are simply accepting their current provider’s quote at renewal time, then the odds are they could be overpaying by hundreds of euro.

“And the same goes for home insurance and electricity and gas, which even less people shop around for.

“In reality, it means that thousands of people across the country are paying too much on their various insurance premiums.”

He says that in their experience, switchers typically knock 25% off last year’s premium. “If you’re on the wrong deal, or are paying too much for your home or motor insurance, simply ditch-it and switch-it.

“Thousands of households across Ireland are suffering from higher price inflation, and much of this pain can be alleviated by switching provider.”

It’s interesting to note that the survey reveals that men tend to be better switchers than women. When it comes to utilities, 68% of men reprice at least every three years, compared to 57% of women.

On home insurance, 79% men go back to the market at least every three years compared to 67% of women. On car insurance however, we all tend to be more motivated. 76% of men and 74% of women reprice at least every three years.

“The most active age group of switchers for car insurance is 25–34-year-olds. It’s easy to understand why younger groups are more proactive when it comes to repricing car insurance on a yearly basis — because the premiums paid by motorists can be heavily dependent on age and driving experience. In terms of home insurance, it is 45–54 year-olds who are most inclined to shop around.”

The survey also found that a substantial number of people only change their provider when the price increases significantly.

There is also a relatively large cohort who still auto-renew every year. Combined, these non-switchers account for almost three in 10 consumers when it comes to home insurance, and almost four in 10 for utilities.

Shopping around isn’t the only way to keep motor insurance costs down of course.

When you’re renewing, pay close attention to who is named on the policy. Forgetting to take a younger driver off a policy can mean motorists are paying over the odds by €500 or more.

Conversely, in some instances, actually adding a named driver can make your premium cheaper. Some insurers assume that if you add a partner with whom you live, that means you are in a stable relationship and will be less likely to claim.

The number of years of no claims bonus (NCB) is also important. A person with only one year’s NCB may only have been offered quotes from three or four insurers originally, but 12 months on, quite a few more will offer terms, which could result in significant savings.

Most brokers will automatically run you through the system again to see what’s available. Drivers dealing directly with an insurer may fail to contact insurers that declined to quote last year. Make sure you do this.

Next, penalty points. If you have clocked up any of these over the previous 12 months, you can be sure they will add to your insurance costs.

All you can do here is ring around or seek expert advice about which insurers penalise least/most when it comes to points on your licence.

Your occupation also plays a critical role in determining what you pay. If you’ve changed job or role over the course of the year then you might find that ticking a new box in the occupation dropdown will have a positive (or negative) effect on premiums.

The location at which the car is usually kept is sometimes factored into premium calculations. Also, whether or not your car is stored in a garage may be considered. If it is, some insurers will see this as lowering its security risk and may adjust the premium accordingly.

It’s often the case that young drivers, when starting out, find that comprehensive cover is prohibitively expensive and settle for third party, fire and theft (TPFT) instead.

However, in some cases, once an NCB is earned in the year, the difference between comprehensive & TPFT narrows significantly and many motorists are able to upgrade their cover at an affordable rate.

All the general factors that impact premiums (car type, age of insured, location of the car etc.) are reviewed periodically by insurers and many will change their pricing structures for each.

The same goes for insurers’ attitude to risk. This can change frequently and will vary too from insurer to insurer. The only way to get a firm handle on it is to ring around or talk to a broker you trust.

Mr Walsh says: “There are thousands of people throughout the country who simply allow their contracts to auto-renew, which is a major no-no.

“In our experience, one of the main reasons people stick with the same insurer is due to a concern over a loss of cover or service, as well as doubts over the hassle and perceived difficulty of switching. The reality is that switching actually takes very little time, and can be done online or over the phone.”

“Both the home and car insurance markets in Ireland continue to be competitive so there’s always money to be saved.”