You’d hope that being a loyal customer might result in lower premiums when you renew your car insurance – but you might find the opposite is true.

Despite a ban a couple of years ago on insurers penalising existing customers, some car insurance companies are finding loopholes that allow them to charge returning customers more than new ones for the same policy.

The Financial Conduct Authority (FCA) introduced rules in January 2022 preventing insurers from overcharging returning customers for their policies, after finding 6m UK customers who stuck with their provider had overpaid by over £1 billion in 2018 alone. Insurers would offer lower premiums to new customers to entice them to switch from their old providers, then gradually ramp up the cost over each renewal period.

Welcome though these rule changes are, don’t just renew your current policy without seeing if you can find cheaper cover elsewhere.

Car insurance renewal premiums have a habit of increasing every year, even if you haven’t made a claim. Compare car insurance quotes from more than 110 UK providers.

In this article, we’ll explain four of the most common ways companies get away with charging existing customers more, based on when and how you apply for cover, and how you can avoid being overcharged.

How you buy car insurance

There are several different methods you can use to apply for a car insurance quote, with phone and online applications via the insurer’s site or a price comparison site the most popular.

Insurers can – and do – vary premiums depending on the type of channel you use to sign up with them. They only have to keep rates the same between old and new customers if they are both using the same channel to access the same policy.

For example, if you renew your insurance over the phone then it might cost you more than doing so online. Rates are likely to be at their cheapest on price comparison websites, but even then you have to be careful, because firms are allowed to vary their rates depending on which of these sites you use.

For example, one insurance customer we spoke to in his early 60s said Tesco Bank quoted him around £658 for comprehensive annual cover on his BMW on one particular price comparison site, but this dropped to only £347 when using the Rest Less car insurance comparison tool.

It goes without saying that the best solution here is to check multiple price comparison sites when it comes time to renew your policy, in order to make sure you’re getting the best deal you can.

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Car insurance renewal premiums have a habit of increasing every year, even if you haven’t made a claim. Compare car insurance quotes from over 110 UK providers – you could save up to £530* per year.

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*51% of consumers could save £529.95 on their Car Insurance. The saving was calculated by comparing the cheapest price found with the average of the next five cheapest prices quoted by insurance providers on Seopa Ltd’s insurance comparison website. This is based on representative cost savings from February 2024 data. The savings you could achieve are dependent on your individual circumstances and how you selected your current insurance supplier.

How close to the start date you are

Even with the new rules in place, insurers are still allowed to change the rates they offer you depending on how close you are to the start date of the cover.

There’s usually a sweet spot when it comes to picking the date that you renew your policy. Leaving it too late and renewing a policy right before the desired start date is likely to be expensive, because insurers might take that as a sign that you’re disorganised or impulsive. But doing so at the earliest possible moment – usually around a month in advance – tends to be pricier too.

According to research carried out by MoneySavingExpert, the best time to renew is actually 20-26 days before the policy start date, and could save you up to 40% compared to renewing later on. Find out more in our guide When is the best time to renew your car insurance? 

What time of day it is

It’s not just the date, however, that can have a bearing on the cost of your premiums. Even the time of day that you renew a policy can make a big difference to your quote.

Prices fluctuate throughout the day, based on demand and the type of drivers applying. Because of this, searching for quotes in the late afternoon and evening might result in costlier deals than if you’d searched in the morning, because by this time insurers are likely to have signed up several new drivers already.

That’s not to say it’s as simple as first-come first-served, however. Searching in the very early morning might raise concerns with insurers about your sleeping habits and could see you hit with higher rates. For the best results, try taking a look at rates around breakfast or lunch time.

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The new rules only apply to policies that are the same, meaning that if your policy has any add-ons, it could still cost more to renew than a no-perks policy purchased by a new customer.

Some firms will go ahead and stick these add-ons onto your policy over the years and charge you accordingly, even if you haven’t requested them. Always review your policy carefully to make sure you aren’t paying for any features you haven’t specifically asked for, or see if you’re still paying for any that you no longer feel you need. Find out more about car insurance add-ons in our guide What are the best car insurance extras and add-ons to have?

What can I do to avoid being overcharged?

Following the advice above can give you a real edge when it comes to renewing your insurance and dodging increased premiums. To recap, that means checking a few different price comparison sites in the morning around 24 days before you want cover to start, and making sure that no unnecessary add-ons are included in the policy.

There are still more ways to keep car insurance costs down, however. Our article Six practical tips to reduce your car insurance premiums contains a variety of useful and easy ways to make sure you don’t end up paying more than necessary.

If your car insurance is coming up for renewal soon, you can compare car insurance quotes from over 110 UK providers using this car insurance comparison tool.

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