29 February 2024 , 09:55
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Martin Lewis has issued a warning to car owners about the "skyrocketing" cost of car insurance.
In the latest newsletter for MoneySavingExpert.com, Martin told readers that insurance costs have gone "up a shed load". He also shared his top tips on how to save money and revealed one thing you should 'never' do when renewing your policy. The money-saving guru explained that car insurance premiums have shot up in recent years, with average prices now around £1,000 per year, according to some comparison sites.
Martin said that insurers blame these huge price hikes on inflation, rising car repair costs and increased payouts due to the growing value of used cars. He wrote: "In October, I wrote in this email that, hideously, average car insurance prices had risen to a massive, unthinkable £924/yr. Now, as we approach March, one of the busiest months for renewals, October is looking like the good old days."
He warned that although prices "shouldn't rise as steeply" in 2024, drivers will "still be slapped with last year's huge hikes" when it's time to renew. Martin has a top tip for drivers looking for the best car insurance deal: use a comparison tool. He says you should "never just auto-renew" without checking if there's a better offer out there, reports The Manchester Evening News.
Even though new rules limit how much insurance companies can charge existing customers, Martin warns that auto-renewing "is still likely to cost more" than shopping around. He said: "Of course, of the millions of readers of this email, some will find their renewal is cheapest. If so, fab. The key is to never assume your renewal is the winner without checking."
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Martin also shared when the best time is to look for a quote to get the lowest price. He suggests the "optimum" time to get quotes from new firms is 23 days before you want the cover to start. But he added that "any time between 20 and 26 days does the job", warning that waiting any longer could see your quotes almost double.
However, it's not just drivers with a renewal date coming up who should be thinking about getting a quote. Martin says even if you're mid-way through a policy "it's worth checking to see if you're currently overpaying even if you're months from renewal".
"If you are switching mid-year, provided you haven't claimed on your current policy, you can usually just cancel and get a pro-rata refund if you paid upfront, minus a usually £50 admin fee (do factor that in). The main negative is you won't earn the year's no-claims bonus," he explained.
For drivers who like their current insurer and want to stay with them, he urged them to haggle to get a better price. Martin said if you can find a cheaper quote elsewhere, it's worth contacting your current provider to see if they will match it. Insurers calculate prices based on the risk of claims being made and the costs of those claims.
Data from the Association of British Insurers (ABI) indicates that for drivers aged 18 to 20 and 86 to 90, the frequency of claims and the average cost of claims is higher, which can affect premiums. Insurers use several factors when setting the price for motor insurance, including the type of vehicle, where it is kept and the driver.