Martin Lewis gives advice on when to renew car insurance
Martin Lewis has said drivers should play insurers “odds against them” and “renew earlier” to get the best deals. He has revealed the sweet spot for renewal is 21 days but anywhere between three and four weeks would lead to the cheapest prices.
Speaking on the Martin Lewis Money Show, he revealed securing cover early is simply taking advantage of how insurance premiums are calculated.
He said: “This is not about your renewal price, it’s the cheapest price you’ll get on a comparison on the days before you renew.
“If you try and get a quote 30 days before the price is pretty high then it drops very rapidly.
“The sweet spot is around 21 days but anything three or four weeks.
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“Then it starts to go up and up and up until we are talking about renewing at the last moment which is nearly twice the cost.
“You’re saying ‘that makes no sense, why’. Well, there is a reason.
“Insurance pricing is based on risk and if you are the type of person who leaves it to the last minute their risk charts show you’re a more risky person so they will charge you more.
“So play their risk odds against them and renew earlier in that sweet spot of three to four weeks and you can save money.”
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During the show, Matthew from Blackpool thanked Martin for the tip which he said had helped him save over £400 during the lockdown.
He said: “As a regular viewer of the show my mum contacted me regarding Martin’s 21-day comparison tip as my car insurance was up for renewal at the end of the month.
“I went online and saved over £450 which came at a really important time as I was on furlough during the first lockdown.”
Experts at MoneySuperMarket have confirmed drivers can save money by renewing their policy earlier than they may feel they have to.
They confirmed drivers could pay up to 13.8 percent less for a new quote if they apply eight days or more from the end of their current contract.
A quarter of car insurance quotes analysed by MoneySuperMarket saw savings of up to 28.1 percent or more if quotes were obtained at least eight days before expiration.
They warned the sharpest rise comes three days before renewal as insurers try to catch out those who have not made new arrangements.
Data from Compare the Market has shown drivers could save an average of £393.51 if they switch their car insurance provider three weeks before renewal.
At this point, average policies come in at £518.16 compared to an average of £911.67.
MoneySuperMarket warns auto-renewal costs UK motorists an estimated £565million every year.
This is because insurers have a habit of increasing your premiums by an average of around £40 per year.
The Financial Conduct Authority (FCA) is currently looking into concerns over firms gradually ‘price walking’ costs.
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