UK homeowners are “tricked” into collectively wasting £37m annually by allowing their home insurance provider to automatically renew their policy, according to MoneySuperMarket research.
The analysis says one-quarter (26%) of homeowners with buildings and/or contents cover automatically renewed their policy with their existing provider and almost two-fifths (39%) saw their premium rise as a result.
MoneySuperMarket consumer affairs expert Kevin Pratt said: “When it comes to insurance, the message is clear: loyalty doesn’t pay.
“Insurance companies trick loyal customers into sticking with them – but with higher premiums – through confusing renewal letters and notices, whereas new customers are offered great rates to get them through the door,” he said. “If this happens year on year, loyal customers can end up paying hundreds of pounds more than they need to.”
Over half (54%) of those with buildings and/or contents cover chose their current provider because they offered the cheapest deal when they took out the policy. But for those who automatically renewed, premiums rose by £9 on average. If those customers shopped around at renewal, they could see savings of £59 each or £243m collectively.
When renewing home insurance, only 15% of policyholders looked around for other quotes before negotiating with their existing provider to get a lower price. One quarter (26%) did not shop around for cheaper quotes.