Need to know
Experts echo Martin Lewis’s latest warning on getting the right level of cover and shopping around for insurance savings at exactly the right time
There is a ‘sweet spot’ for car insurance renewals that experts say can slash your bill by around half(Image: d3sign via Getty Images)
Following comments made by financial guru Martin Lewis on his Money Show urging people to make sure they are on the right insurance and not just the cheapest, experts are urging households to rethink their renewal strategies. Industry data suggests that simple changes in timing and detail could save consumers hundreds of pounds on their annual premiums for car and home cover.
- Compare the Market’s Sam Wilson emphasises that homeowners should prioritise the quality of cover over the lowest price. Failing to carefully review policy details can lead to a significant risk of being underinsured during a claim.
- Strategic timing is essential for those looking to reduce their household bills through more competitive insurance deals. Research indicates that people could save up to £191 by shopping around for home insurance before an automatic renewal.
- Motorists are being reminded that car insurance premiums have actually fallen by nearly a fifth over the last year. Despite this downward trend, drivers should never assume their existing provider’s renewal quote remains the most affordable option.
- Buying car insurance approximately 26 days before the actual renewal date is identified as the best time to get lower pricing. Check when that will be so you can start looking around for alternatives in good time – you should get an email reminder of an upcoming renewal from your existing provider. Note that prices tend to go up as you get closer to the renewal date. Data from Compare the Market shows this proactive approach can lead to annual savings of up to £499 compared to last-minute purchases.
- Mr Lewis explained on his show: “The sweet spot is roughly 26 days before the new policy, but a couple of days either side of that doesn’t really matter. By the way, [for] home [insurance], it’s a little bit earlier – 15 to 20 days beforehand. The price you’re quoted there – and it doesn’t work for everyone, but it does for many people – will be nearly half what would happen if you got a quote the day of your renewal.”
- He added: “What actually happens is, all of insurance pricing is based on… who is a bad risk. The type of people who leave it to the last minute are deemed to be a higher risk than people who go and get their insurance earlier.” One woman said she had cut her car insurance by 49 per cent from £913 to £468 by using the 26-day rule.
- Small adjustments to policy details, such as job titles or adding named drivers, can also have a surprisingly large impact on costs. It is vital to ensure all information is accurate to avoid invalidating the policy.
- Consumers are encouraged to explore multi-car or multi-policy options every single year to maximise their potential discounts. Using comparison sites allows individuals to weigh up these complex variables quickly to find the most suitable and cost-effective protection.
