Don’t let your insurance policies renew automatically

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New survey finds that while a slim majority of us shop around for car insurance, only half do the same for home insurance, while just four in ten are looking for a better deal on electricity and gas .

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

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

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

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

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

People.ie CEO Paul Walsh says our tendency to seek better deals on our annual big spend seems to be different depending on the product.

“While 68% of people looking for their annual car insurance might seem like a good statistic at first glance, we wonder what the remaining 32% do – if they just accept their current provider’s quote at renewal time, then the chances are they are overpaying hundreds of euros.

“And the same goes for home insurance and electric and gas, which even fewer people shop for.

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

He says in their experience, switchers typically take 25% off last year’s premium. “If you get a bad deal or overpay for your home or auto insurance, just drop it and change it.

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

Interestingly, the survey reveals that men tend to be better switchers than women. When it comes to utilities, 68% of men reassess their prices at least every three years, compared to 57% of women.

In home insurance, 79% of men return 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 reassess at least every three years.

“The most active age group among people switching car insurance is 25 to 34 years old. It’s easy to see why younger age groups are more proactive when it comes to repricing car insurance on an annual basis, as the premiums motorists pay can be highly dependent on the age and experience of conduct. In home insurance, it is the 45-54 year olds who are the most inclined to shop around.

The survey also revealed that a significant number of people only switch providers when the price increases significantly.

There is also a relatively large cohort that still automatically renews each year. Together, these non-movers make up nearly three in 10 consumers when it comes to home insurance, and nearly four in 10 for utilities.

Shopping around isn’t the only way to cut auto insurance costs of course.

When renewing, pay close attention to who is named on the policy. Forgetting to remove a young driver from a policy can mean motorists pay upwards of £500 or more.

Conversely, in some cases adding a named driver can make your premium cheaper. Some insurers assume that if you add a partner you live with, that means you’re in a stable relationship and you’ll be less likely to make a claim.

The number of bonus-malus years (AON) is also important. A person with only a year of PNE may have only received quotes from three or four insurers originally, but 12 months later a number of others will be offering terms, which could result in significant savings.

Most brokers will automatically chase you through the system to see what is available. Drivers dealing directly with an insurer may not contact insurers who refused to quote last year. Make sure you do.

Then the penalty points. If you have accumulated any in the last 12 months, you can be sure that they will increase your insurance costs.

All you can do here is phone or seek expert advice to find out which insurers penalize the least/most when it comes to points on your license.

Your profession also plays a vital role in determining what you pay. If you’ve changed jobs or roles during the year, you may find that checking a new box in the occupation drop-down list will have a positive (or negative) effect on bonuses.

The place where the car is usually kept is sometimes taken into account in the calculation of premiums. In addition, whether or not your car is stored in a garage can be taken into account. If so, some insurers will see this as a reduction in security risk and may adjust the premium accordingly.

It often happens that young drivers, when they start out, find property and casualty insurance prohibitively expensive and settle for liability, fire and theft (TPFT) insurance instead.

However, in some cases, once a PNE is earned within a year, the difference between full and TPFT narrows significantly and many motorists are able to upgrade their coverage at an affordable rate.

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

The same goes for the attitude of insurers to risk. This can change frequently and will also vary from insurer to insurer. The only way to get a firm grip is to call or talk to a broker you trust.

Mr Walsh said: “There are thousands of people across the country who are just allowing their contracts to renew automatically, which is a major no-no.

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

“The home and car insurance markets in Ireland continue to be competitive, so there is always money to be saved.”

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