A new study by ‘comparethemarket’ has revealed a somewhat astonishing statistic on the cost of renewing your existing insurance policy or taking out a new deal. Motorists who leave it until the very last minute to insure their vehicles face a hefty premium, which can run to hundreds of pounds extra in many cases. For example, a typical policy that costs around £360 when taken out up to a month before the previous cover expires can cost upwards of £685 on renewal day. These figures are further affected by a recent rise in insurance premium tax, which means comparable policies on both new and used cars can be £100 more expensive than at the same time last year.
While most people would expect the price to rise when buying at the last minute, it’s the scale of the rises that leave a sour taste. Perhaps most worrying of all in the study is just how late many motorists leave their insurance renewal. A staggering 25% of motorists fail to renew their policy until their existing deal expires, with a further 13% taking out a new policy the day before.
By contrast, the best deals are typically available around 3-4 weeks before renewal, when savvy consumers have time to shop around and locate the best deals – and can even use the research to negotiate a better deal with existing brokers. However, despite an increasingly knowledgeable customer base, which is well used to haggling cheap deals from utility or TV service providers, just 1.5% of motorists buy their policies so far in advance, meaning that insurance companies can cash in on those who leave it until the last day or two.
The study also revealed that the best month to buy new insurance cover is January – brokers offer competitive deals at the start of the year, and there’s also the possibility of enhanced cashback rates from sites such as ‘Quidco’ or ‘TopCashBack’. The start of the year is a busy period for the motor trade as people get their finances sorted after Christmas and look for excellent deals ahead of the launch of the new registration plates and new car models each March.
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If you’re considering a car purchase, January is not just a good time to get out and about on trade plates, it’s also the perfect time to start looking for a competitive insurance deal, or haggling with your existing insurer for a better deal well ahead of the renewal date. By allowing your policy to just roll over to the next year, you’re almost certainly going to be much more out of pocket than if you take a few minutes to shop around. In an age of austerity, where every penny matters, insurance is a good area that you can save plenty of money with a little preparation and research.
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