New MoneySuperMarket research has found that a quarter of homeowners with buildings and/or contents insurance automatically renewed their existing policy.
What’s more, almost two fifths of them ended up paying higher premiums as a result.
Loyalty doesn’t pay
Home insurance expert Kevin Pratt said: “Insurance companies trick loyal customers into sticking with them– but with higher premiums – through confusing renewal letters and notices, whereas new customers are offered great rates to get them through the door.
“If this happens year on year, loyal customers can end up paying hundreds of pounds more than they need to.”
More than half of those surveyed for the research chose their current insurer because it offered the cheapest deal when they took out the policy, but for those who automatically renewed, premiums rose by £9 on average.
The research looked at the reasons people most commonly renew with their current insurer. The main reasons was that they were happy with the cost of their cover.
A fifth of those polled said they couldn’t be bothered to shop around while another fifth said the loyalty they felt to their insurer kept them from switching.
16% said they simply liked their current insurer’s brand and 13% like the customer service they received.
Home insurance premiums fell to a six-year low in April, and prices are now at their lowest since 2010, standing at £109 on average for combined buildings and contents cover.
Kevin said: “As a nation, we spend over £37 million more than we need to because so many home insurance providers renew their customers’ policies automatically – that’s money we can’t afford to waste.
“There are savings of up to £59 per household to be made by shopping around and switching providers, rather than letting insurers get away with it.”
Kevin added: “When it comes to insurance, the message is clear: loyalty doesn’t pay.”
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