The dangers of auto-renewing your car insurance

Too busy to shop around? Then be prepared to shell out more of your hard-earned cash than you need to.

There are so many things vying for your attention these days that it’s easy to become overwhelmed. So when you are given the rare chance to save yourself a job, like letting your car insurance auto-renew, you should take it, right?

If you do, it could cost you more money, and yet 78% of us didn’t shop around for insurance last year. Another report shows 75% remained loyal to their insurance providers.

car on sideroad

Auto-renewing car insurance dangers

In 2016, a UK report calculated the total amount of money that insurance customers wasted by accepting the auto-renew price they received from their provider. In total, about £1.3 billion (or $2.33 billion) went to insurers when customers could have shopped around.

The practice of automatically continuing insurance is perfectly legal, so make sure you’re fully aware of your current insurer’s auto-renew policy. Don’t forget to set a reminder on your phone or calendar to give you plenty of time to compare new deals well in advance of the policy expiration/renewal date.

Keep all paperwork and communications from your insurer so you can compare the price year to year.

Why do insurance prices go up even if you don’t claim?

Sometimes it feels like being a careful and safe driver isn’t rewarding.

After another year of incident-free driving you receive an email or letter from your insurance provider who kindly increased the price of last year’s premium. Where do they get their figures from?

There are literally dozens of contributing factors that impact your insurance quote, including your age, the area you live, driving experience, occupation, claims history, your credit score and many others.

But there are also external influences in play here. The company may have experienced increased claims involving uninsured drivers over the previous year, forcing them to charge higher liability costs and spread them out over all their customers. Perhaps the area you live in has seen a surge in car crime, collisions or fraud, increasing the risk for your insurer. Maybe the car you drive is becoming popular with thieves.

Even court verdicts, legal costs and the price of car components along with repair wages impact on your renewal price.

It could also be part of your insurer’s business plan to put up the auto-renewal price in the hope that you’ll forget to investigate other options, fail to act quickly enough or simply pay it because you think it’s easier. Insurers often say this is a service they provide to customers to prevent them from accidentally driving without insurance.

Ask for a discount

Sometimes you just have to ask for an insurance discount.

  • If your insurer sends you a quote and you’re not happy with it, first, search online for cheap car insurance deals.
  • Find three different quotes and then approach your own insurance company. Nowadays you can phone them, write to them, email them and even chat online.
  • Find out if they are willing to better their offer. No doubt they will have some leeway in the price. Insurance companies know that it costs more money to attract new customers than it does to keep their old ones, so often they are very accommodating.
  • Don’t forget to keep an eye out for any price beat insurance deals.

If your car insurer doesn’t prove helpful, it’s time to switch and go elsewhere. Rival companies could be offering significant discounts to new customers or those who sign up online. It’s worth comparing car insurers.

What if an insurer mistakenly renews your cover?

Contact them immediately and explain that you were unaware you had opted into an auto-renewal and you’d like the policy cancelled with a pro-rata refund. Ensure this doesn’t happen again by reading your policy documents and know about cooling-off periods plus any possible cancellation fees.

Still confused by car insurance?

Don’t get bogged down with all the legal jargon and confusing acronyms. Read our car insurance guide including the low-down on cover types and car insurance costs by state or make. How to switch car insurance is another must read.

Ready to make the switch? Compare car insurance policies

Name Product New Car Replacement Pay monthly at no extra cost Choice of repairer Roadside Assistance Hire car after theft Personal effects
Optional - If your car is written off in the first 3 years
No
No
No
Optional - Up to $50 a day until your claim is settled
$0
Save 24% on your policy if you've been claim free for 3 years.
Yes - If your car is written off in the first 2 years
Yes
No
No
Yes - Up to $70 per day (Max 14 days)
$500
Transforms your driving so it's 100% carbon neutral.
Yes - If your car is written off or stolen in the first 2 years
No
Yes
Yes
Yes - Reasonable costs (Max 14 days)
$750
Emergency roadside assistance included in Comprehensive policies.
Yes - If your car is written off in the first 2 years
No
No
Optional
Yes - Up to $70 per day (Max 14 days)
$500
Save up to 10% when you buy online.
Yes - If your car is written off in the first 2 years or is under 40,000 km
No
Yes
Optional
Yes - Up to $1,000 (Max 14 days)
$250
Buy online and save 15%.
Yes - If your car is written off in the first 2 years or is under 40,000 km
No
Yes
Optional
Yes - Up to $1,000 (Max 14 days)
$500
Save 15% when purchasing online. Eligible customers can earn up to 20,000 Velocity Frequent Flyer Points when purchasing a new policy by 31 Oct 2018. Excludes NT. Min 6mths policy & T&CS apply.
Yes - If your car is written off in the first year or is under 20,000 km
No
No
Optional
Optional - Up to $60 per day (Max 14 days)
$500
Save up to 20% on car insurance when you purchase cover online.

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Ben Gribbin

Ben is an experienced automotive writer and life-long car enthusiast with a passion for restoring classic vehicles. He brings his many years experience working with and writing about cars to finder.com.au.

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