Automatic renewal is spreading amongst us more rapidly than mutated flu strains. Online forums are just beginning to realise the ongoing legal implications relating to the scurrilous practice of automatic renewal, and that it is, as yet, unquestioned by regulatory bodies such as the Financial Service Authority (FSA) and not covered by the Treat Customers Fairly policy.

Allowing an insurance policy to auto renew will incur an approximately twenty five per cent rise in the new premium’s cost. The rising popularity of the comparison websites such as confused.com and comparethemarket.com, have made it much easier to escape these massive price hikes in policy premiums. But what you may not know is: if you fail to contact your previous insurer to cancel the policy you may experience the ominous clang of the auto renewal trap on your finances. It will be doubtful if you recoup the total of your losses due to the cancellation fees that kick in after the payment has been taken from your credit card - cancellation periods can vary from company to company and details of these restrictions are usually only available in the small print.

Always read your financial junk mail – or it may cost you more than the savings you made online!

This is a very one sided view, The practice of Automatic renewal ensures that you do not have a period of time when you are left uninsured and therefore protects against any potential liabilities, I forgot to ring up and renew my insurance, thankfully the company had renewed my cover, I was thankful for automatic renewal! This also happened to my friend who as you rightly pointed out did not get all there money back, from what I understand this is due to the fact that the insurance company that she used to be with would have been jointly liable if she had claimed.

You can call and specifically request that your policy does not automatically renew from my perspective I would not want that, I am thankfull for this "scurrilous " practice

Don't know where you get your 25% increase in premiums as this is not my experience

gaz3003:

You can call and specifically request that your policy does not automatically renew

I've done that three years in a row (with 2 companies). The first time my preference was ignored and the renewal went through without me receiving any paperwork (no quote, no certificate, nothing). I had a row with the insurer and they eventually agreed to refund pro rata. The next two times my preference was ignored but I did receive the renewal quotes in good time stating that, unless I made contact, the policy would be renewed.

As I keep saying to them, if I dropped dead or went into hospital for a long period, they would still keep charging for car insurance. I know that I can either request a refund or dispute unauthorised payments through my bank, but this should not be necessary.

I do not like setting up direct debits with organisations that I don't trust. I certainly don't trust organisations like those alluded to above and I would be very grateful to know how I can avoid setting up these automatic payments. If you "call and specifically request that your policy does not automatically renew" it has no affect in my experience.

Yes, it is very convenient to let anyone take whatever money they want from your bank account, but only until the money runs out and then it gets to be a bit of a nuisance.

Incidentally, I suspect that the original post has been copied and pasted rather than being written specifically for this forum. If you look at the comparison sites mentioned, there is one notable omission!

Hi Gaz,

The article was written for various financial sites (I'm a writer). After being bitten by automatic renewal myself, I researched it and found there was no safety net in place for people who were not aware of the practice and that there was no legal reason (yet) why companies should cease taking payments from credit cards used to purchase insurance from them the previous year. As long as it is stipulated once in hard copy (no matter how small) it's legal for the company to take payment for the new premium.

My concern is that if anyone does throw away so called financial junk mail, they will only realize there is a problem when the debt collectors show up. I pointed this out to the company with which I was in dispute and the upshot of what they told me equated to: if the individual wishes to use a comparison site to save money they should do the research necessary to not incur extra charges, in this case meaning the policy renewal transaction plus cancellation fee.

This information needs to be writ large to stop folk who are trying to save money in these financially challenging times from losing yet more cash due to a lack of information.

Comparison sites are great, I use them all the time. But people need to know they must cancel the previous policy straight away and make doubly sure it has been cancelled. Get it in writing!

I accept "big picture" pros and cons here other than to heartily agree with Bueller's ..."information needs to be writ large..." The financial services industry is very keen to follow, what I understand to be the "used car dealer practice" of highlighting the good (from their point of view) and burying the bad or more benignly the equally unacceptable practice of stating the minimum and expecting the prospective customer to accept that there are no catches or swim through treacle to be absolutely sure.

I reply to this post only because I have a wonderful example for you. I walked up to my local Nationwide branch yesterday to use the ATM and saw in the window the 4% ISA for over 50s only. I read all the limited info on the poster and did not find the piece of information I wanted. To my shock there was not a soul in the branch so I popped in to ask my simple question. As is standard practice with my local branch a standing staff person was speaking with the only cashier and ignoring me finished the conversation and then the cashier politely turned to me.

Me - Does the ISA accept transfers in?

Cashier - Oh um it's very new, I don't know... Calls to suited man and says to me please take seat in cubicle etc.

Me - I ascertain that "suit" is manager. Does the ISA accept transfers in?

Suit - That's a good question, I don't know I'll just look it up... Forget that intitiative suggests that manager should have looked this up and told staff. He can't find the information anywhere on the Nationwide internal site. He phones Nationwide internal. He gets off phone and although pretty sure transfers in are ok says best thing to do is get information pack and should be able to fill out transfer form.

As Bueller says and this is a broad based example... This information needs to be writ large... Even if only for Nationwide's benefit - that simple query took the branch about 15 mins of primarily the manager's time!