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Correct at the point of publication.
Car insurance premiums are rising steeply to record levels.
The Association of British Insurers (ABI) says average prices paid for policies rose 12% to £627 in the final three months of 2023, compared to the previous three months (£562). Worse still, the increase from Q3 to Q4 last year was 34% higher than the increase between Q3 and Q4 in 2022.
Premiums are now at the highest levels the ABI has ever seen, largely due to the increased cost of repairs, replacement courtesy cars and general inflation across the economy.
This makes it all the more important to shop around for cover, and to switch to the provider offering the protection you need at the best price.
If you’ve never switched, or you’ve been with your insurer for a long time and aren’t used to switching, here’s how to do it in three easy steps.
1. Compare car insurance prices online
Assuming that price is a factor in your decision to switch car insurance, it’s best to first see what other providers are quoting you for the same cover you have at the moment. It’s better to do this before you speak to your current insurer about not renewing.
This will give you a sense of how reasonably priced the renewal quote is and, if you’d prefer to stay with your existing insurer despite it charging a higher price, provide you with some leverage to try to negotiate their quote down.
Getting a range of car insurance quotes online takes only a few minutes and gives you a number of insurers and policies to choose from.
All you need is some basic information about yourself, your circumstances, your driving and your vehicle.
This includes your name, address, age, your car’s make and model, its value and where it’s kept during the day and night. Insurers will also want to know what you use the car for (commuting, social and/or domestic use), how many miles you cover in a year, whether or not you’ve made any insurance claims in the past.
You’ll have to disclose any points on your licence, any previous disqualifications/convictions and whether you’ve been refused insurance in the past, but the entire fact-finding process can usually be completed within 10 minutes.
You can even speed this up by sharing your driving licence number, which can be used by the quote service to retrieve this data from the Driving & Vehicle Licensing Agency (DVLA).
Once submitted, you’ll quickly be shown a list of policies offering the cover you’ve said you want, and how much they cost – both annually and per month.
2. Speak to your current car insurer
Phone your current insurer and let them know you’d prefer not to renew your policy this year. They are likely to ask you why you’re leaving, and while you’re not obliged to tell them, they may be willing to negotiate on price if that’s the issue.
If so, they’ll probably ask you what you’ve been quoted for cover elsewhere. Provided the prices you’ve been quoted are for equivalent cover, tell them how much cheaper the other providers are.
They’re likely to tell you they can reduce your premiums, if not match the quotes you’ve seen. If, however, the reason you’re leaving is more to do with service than price then this is unlikely to matter.
Assuming you’re not convinced to stay, the insurer will agree not to automatically renew the policy and will confirm its end date. After this point you will have no car insurance protection unless you arrange for a new policy to take effect.
If you have a renewal letter from the insurer, this is likely to serve as proof of your no claims discount entitlement. If, however, you no longer have a renewal letter or never received one, it’s worth asking for proof as you’ll need it when buying a new policy.
3. Choose a car insurance policy and apply
Go back to the car insurance comparison service you used and, once you’ve found a policy that offers the cover you need at a price that suits you, click to go to the provider’s website.
You may then be required to supply a little more information and/or confirm the information you’ve provided thus far.You also need to pass a credit check if you’re applying to pay your premiums monthly.
Before confirming everything you’ll get a chance to review the policy documents. These tell you exactly what’s included and what’s excluded from the policy, as well as the various voluntary excess sums you’ve opted to pay in the event of a claim. It’s important to review these documents before finalising your purchase of the policy.
Once you’ve agreed to the insurer’s terms and conditions you can confirm the purchase and your policy will be set to start on the agreed date. Unless you’ve opted to manage your account wholly online, you’ll receive some policy documents in the post after a few days.
Other switching circumstances
All of the above assumes you’re switching because you’re coming to the end of your car insurance policy’s term and don’t want to renew, for whatever reason.
There may be other circumstances in which you might want to switch car insurance, however.
For example, if you were to get a new car within the term of your insurance policy you might want to simply transfer the policy to the new vehicle, but it might be worth looking if you could save by switching mid-policy.
If the savings to be made by switching to a new provider are greater than any penalties or fees you’d have to pay to leave your existing provider, it may be worth switching – assuming you’ll still have the appropriate level of cover at the end of it.
You’d have to speak to your existing insurer to let it know you want to leave and arrange any settlements owed to either of you. For example, if you paid for your annual premium upfront but want to switch after six months, you’ll need to know how much you’ll be refunded. Refunds are typically given on a pro-rata basis minus any fees.
Only when you have confirmation that your existing policy will end should you arrange cover with the new provider, with the new policy taking over from the old one with no gap and no overlap.
Another circumstance in which you might switch is when you’re putting a car previously declared off the road with a Statutory Off Road Notice (SORN) back on the road. With the SORN in place, you don’t need insurance, but if you come out of the SORN, you’ll need a new policy.
In that case you could simply use a car insurance comparison service to find the best price for the cover you need, with no need to notify your previous insurer about the change.
Another example would be if you were coming to the end of a short insurance policy offered with the purchase of a new car. In this example, you’d still need to find a new policy with another insurer and plan for the policy to begin on the day the free one ends.
