When you receive an email or a letter that an insurance premium is set for automatic renewall, it’s quite easy to sit back and just let it happen, but it’s likely that your premium price has increased. This is precisely what the company is hoping for, a bit of easy money, customer inertia is the industry’s best mate. They don’t want you to bother looking around for a better deal – but you definitely should.
1. You are throwing money away! People who have home insurance are wasting at minimum £37 million per annum because of auto renewal, according to the one of the leading price comparison sites, MoneySupermarket.com. Stand alone insurance for your mobile device is one for catching people out, because it rolls over and over for years if you don’t cancel it yourself.
2. Insurance auto-renewal was introduced in 2011 to make sure people didn’t drive around illegally, and because many mortgages are invalid without cover. However, Mr Pratt says: “Since then it’s become an egregious way for companies to levy a tax on customer loyalty. I can’t stress too highly: when it comes to insurance, loyalty doesn’t pay.” In December last year the Financial Conduct Authority (FCA) said it would launch a voluntary requirement for insurers to include last year’s premium with the new one on renewal letters. This should be introduced from 2017.
3. Many companies make it a hassle for customers to move elsewhere. Read the small print of Swinton Insurance, for example, and you discover you will pay a “pre-renewal deposit” for next year before you know what your new premium is. This will be refunded if you switch providers, but only if you ask for it before the end of the year. Other insurers charge up to £50 if you switch to another insurer after receiving your auto-renewal premium, even during the “cooling-off period”. Mary Furey wrote to Money’s Troubleshooter when her Bupa premium jumped 54 per cent, even though she had not made a claim for ten years.
4. The Financial Ombudsman Service (FOS) continues to get a “significant” number of inquiries each year from people who have had products automatically renewed. Matthew Allinson, of the FOS, says: “We have made it clear in our discussions with insurers that we do not consider ever-increasing premiums for loyal customers to be acceptable, but we can’t make the insurers offer competitive rates.”
5. How do I fight back? When a premium comes up for renewal, check whether you could get a better deal on price-comparison websites, such as comparethemarket.com and gocompare.com. It may also pay to tell your insurer that you are leaving, to help to secure a better deal by negotiation.
5 more unnecessarily pricey products!
Bank accounts with a monthly fee in return for “benefits” such as insurance and breakdown cover are referred to as the new PPI. Complaints rose from 34 in 2012 to 44,244 in the year to April 2016. Check that you are eligible for all the insurance products and
that they are not cheaper elsewhere. Some accounts come with mobile insurance that is needless if you have home-contents cover for gadgets.
Most expensive products you buy are covered by a manufacturer’s warranty, or even your home insurance. Plus, changes in consumer law mean that if something goes wrong within an unreasonably short time, you are entitled to refund, repair or replacement, regardless of whether or not you have a warranty.Some warranties come with odd exclusions. For example, if you use a coffee machine or washing machine in a farmhouse, office or B&B, you may be unable to make a claim.
Sold as a convenient way to pay for your funeral, or leave a lump sum of money to your family when you die, you are “guaranteed” a payout in return for small, regular monthly premiums. Anyone who lives an average lifespan will end up paying in far more than their family will receive — hundreds of pounds down the drain.
High-interest credit cards
When many 0 per cent balance-transfer deals end they revert to enormously high interest. The idea is to lure in customers who then forget or are unable to pay off their balances.
Expiring savings rates
Every bank or building society has cut rates on Isas at least once in the past six years, according to research. NatWest cut its rates eight times across its two instant access savings accounts. Customers earning 2 per cent in 2010 get 0.25 per cent now.
Have you found a great insurance deal that you’re dying to share? Have you saved a good amount of money by using any of these tips? Get in touch! I’d love to hear from you!