UK drivers are missing out on over a billion in savings by making a simple mistake with their car insurance premium.
Recent research by Go Compare has revealed that around five million drivers in the UK are missing out on savings which total around £1.4 billion.
This is because these motorists are auto-renewing their car insurance premium which is potentially seeing them pay more.
Auto-renewal automatically allows you to be signed up to a new policy, which is typically more expensive than shopping around.
Millions of motorists are still overpaying for their premium despite new rules implemented by the Financial Conduct Authority (FCA) in 2017 aiming to stop this.
As of April 2017, new rules dictated that insurers must show the previous year’s premium on the renewal letter.
This was done to ensure that motorists could know whether or not they would be paying more and whether or not they should shop around for a better deal.
Research suggests that typically drivers who renew their premium end up paying more for their premium that those that don’t.
In addition to this, average premiums dropped by around £67 in the second quarter of 2018 compared to the previous year, according to MoneySuperMarket.
Research also stated that 16 per cent of drivers are still letting their premiums auto-renew despite the large majority of drivers recalling seeing this information on their premium.
One benefit of auto-renewal is that it means you will never be left without cover which can be dangerous and land you some hefty punishments.
Driving on the road without insurance is illegal, as drivers are required to have at least third party cover.
If you get caught without insurance then you can be fined £300 and six penalty points.
A spokesperson from the ABI told Which?: “Insurers are not legally obliged to renew a motor insurance policy, but drivers are legally obliged to be covered for their legal liability towards third parties.
“Not all insurers automatically renew your policy, but those that do will ensure that all documentation clearly states that this will be the case – and do so to prevent anyone from inadvertently driving uninsured when their policy expires at the end of the year.”
“Auto-renewal is convenient for customers and gives them peace of mind,’ Heather Smith at insurer LV told us.
“It’s particularly useful for motorists who would be breaking the law if they did not have adequate car insurance.
“Customers have a choice about how to pay and whether to sign up to auto-renewal. We clearly explain this at point of sale and in their documents.
“We also send a renewal invitation to customers three weeks before their renewal date, which includes the price and confirms if we’ll auto-renew their policy.
“In the renewal invite we make it clear that the customer can choose to cancel the insurance if they wish by calling us.”