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Loyalty not the best policy with insurance

This is a busy time of year for car insurance renewals - with nearly half of those sticking with the same insurer believing that a low premium last time round means a low premium this time too.

A survey by GoCompare.com found that 31% of drivers have stayed with the same insurer for three years or more, and nearly half (46%) of those who stayed put believed that as their quote was cheapest last time it was bound to be good value this time around too.

Drivers most often cited "loyalty" to an insurer for not moving their policy, or said that it would be too much hassle even if they could save money - yet they may have missed out on savings of up to £238 in any year.

Even checking your new premiums against your previous one is not easy. Which? recently surveyed 30 of the biggest UK insurers to find out whether they include the previous year's premium on renewal reminder letters. Of those, 29 failed to include this seemingly essential information, with only Axa-owned Swiftcover doing so.

Lee Griffin at GoCompare said: "The first thing customers want to know when they get their car insurance renewal is how much their premium has changed compared to the previous year. Sadly, it is the one piece of information they are unlikely to find on the renewal letter itself.

"I think most consumers would struggle to understand why insurers can't tell you the amount you are currently paying them. The truth is insurers rely on a certain degree of apathy from their customers."

Consumers have a range of options at renewal - but first they need to know how or why their premium has changed, if there are changes in the cover offered, and whether their own needs have altered.

Comparison sites will scan more than 100 different insurance brands, but then begins a new challenge - resisting the inclination to drive down the price of your cover by chopping out features you may need. Worse, there may be the temptation to misrepresent who is the main driver, where young drivers have their own vehicle, or to forget about traffic offences - thereby invalidating the entire policy.

One way to reduce costs is by searching for a telematics policy, under which a box is installed in your car to monitor how the car is driven, the policy usually rewarding good driving with discounts.

Ian Crowder at AA Insurance said that while telematics policies have been largely taken up by young drivers, they can benefit everyone - and there are now more than 20 policies on the market.

He said: "If you are an older driver with a full no-claims discount, they probably won't reduce your premiums, but if you have had a crash and lost your no claims discount, or you have collected several motoring convictions, you may find that it helps to bring down the cost of your cover."

Experienced safer drivers are being targeted with a telematics app by insurer MoreThan. The free app will assess the motorist's driving style for 200 miles with feedback provided after each journey. A discount of up to 20% is then generated, based on factors such as acceleration, braking and speed, which will be applied to any new car insurance quote received through the app.

Mike Powell, a car insurance expert with financial research firm Defaqto, warned: "You need to be aware of potential charges such as the disconnection fee if the policy is not renewed and the policyholder requires the telematics device to be removed, and the transfer fee if the policyholder changes his or her car."

Defaqto's research shows a wide variation in these charges. Cancellation fees range up to £210. Several insurers charge disconnection fees of £100, while transfer fees can be as high as £158.

But he believes there could come a time when car manufacturers start fitting a telematics box as standard - BMW has already started to do so in order to keep track of cars that are stolen.

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Automotive

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