Drivers penalised for buying car insurance at the last minute
Research by Compare the Market found that drivers can make huge savings by switching their insurance policy at the right time.
The research found there are large fluctuations in the cost of insurance depending on when you switch policies, with the cost of new cover often significantly increasing the closer you get to the end of your current insurance policy.
The price comparison site found that if you switch a car insurance policy on the day that it ends, you’d pay an average of £776, compared to £457 if you switch three weeks before.
The cost could then increase as you get closer to the day the policy ends, with drivers paying an average of £493 two weeks before, £565 one week before, and £677 the day before a policy expires and automatically renews.
But despite the significant savings on offer, the highest number of comparisons on Compare the Market take place on the day a policy ends, accounting for 34% of all enquiries.
An analysis of premiums by month over the past eight years also shows that there is a significant disparity in insurance costs throughout the year.
The average policy taken out in December over the past eight years is £61 higher than the average premium for the rest of the year. Throughout the year, the price of insurance tends to steadily increase before peaking in December and dropping again in January.
Dan Hutson, head of motor insurance at Compare the Market, said: “The cost of car insurance varies at different points of the year and this is something that people should bear in mind when looking to renew their policy. There are many reasons for this, including that the cost of a policy reflects the level of demand in the market at any given moment, along with a range of factors based on a person’s risk profile.
“In December, people may be thinking about car insurance less, and so some insurers could charge higher prices based on this reduced demand. The cost of car insurance then drops significantly in January as insurers compete to attract customers as they start to look at their bills after the Christmas break.
“The same goes for switching providers around the end of a policy. The majority of people leave it until the very last minute to renew their policy, but our research shows that there is money to be saved through considering the time that you switch. Shopping around remains by far the best way to save money on insurance, but these statistics prove that this saving can be increased even further by timing policy switches correctly.”