Changes in costs can be due to issues of timing or risk, says motor insurance spokesperson
The timing of consumers’ motor insurance renewals can have a signficiant impact on premiums, according to new research published today (20 February 2023) by global platform Forbes Advisor.
Forbes Advisor found that, on average, policies were 14% cheaper if renewed two weeks before the renewal due date – this amounts to a cost difference of around £123 per year, based on an average annual car insurance cost of £877.
Consumers who renewed their car insurance one month before the renewal date saw a cost reduction of 10% at £88 cheaper, whereas renewing one day before the renewal date resulted in a 6% cheaper premium – amounting to an average of around £53 saved.
Car insurance renewals tend to peak in March and September as new car registrations are released – the incoming 23 plate will be released next month (1 March 2023).
Kevin Pratt, car insurance spokesperson at Forbes Advisor, said there are “a number of reasons why premiums can alter so significantly” when a car insurance policy is renewed.
Demographic ‘favouring’
He explained: “One reason is necessity – after all, car insurance is a legal requirement and motorists who leave it till the last minute to get their insurance are faced with an unforgiving deadline and are likely to stomach higher costs just to get the job done.
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“Another comes down to risk, or rather how likely insurers believe it is that they’ll need to pay a claim.
“Insurers use a wealth of data to make assumptions about their customers, so taking out cover in good time may indicate that [a consumer is] organised and therefore more likely to look after [their] car – and as a result be less prone to make a claim.”
Considering how each insurer reacts differently to market competitiveness, Pratt further noted that prices changes can be due to certain firms “favouring” older drivers or “those living in particular areas”.
The findings were based on quotes retrieved from Forbes Advisors’ quote comparison site in February 2023. A selection of different motorist profiles were used to obtain quotes where the only variable was the policy start date.
The cheapest premiums returned were then averaged and compared to publicly available data showing the average cost of car insurance.
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