Switching insurance policies at the wrong time is costing motorists dear, according to new research. Analysis from price comparison site CompareTheMarket.com found drivers who switch policies at the last minute can spend more than £300 more than those who plan ahead and switch early.
According to the organisation’s study, drivers could save as much as £319 by switching policies three weeks ahead of their renewal date. On average, the cost of switching on the day a policy ends stands at £776, but switching three weeks before the renewal date costs an average of £457.
During the intervening days, CompareTheMarket.com found prices rise steadily. Switching two weeks before the renewal date sees prices average £493, while switching one week before the renewal date takes that to £565. Interestingly, switching the day before a policy expires saves customers around £100 compared with switching on the renewal date, with prices averaging £677.
Yet despite this, CompareTheMarket.com’s research found the highest number of comparisons come the day before the policy ends, with 34 percent of all enquiries occurring at that time. Less than two percent of all enquiries occur more than a week before the existing policy ends.
The analysis also found noticeable price fluctuations at various times of the year. The research showed the average premium in December over the past eight years is £61 higher than the average premium for the rest of the year. In fact, CompareTheMarket.com says prices rise throughout the year, climbing to a peak in December before falling again in January.
“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,” said Dan Hutson, the head of motor insurance, at CompareTheMarket.com.
“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.”