A Martin Lewis listener has explained how she saved almost £600 by following his advice on car insurance. Kath from Liverpool told Martin during a recent edition of the Martin Lewis Podcast that she had saved £589 on her car insurance by following his recommendation to search for fresh quotes 23 days before renewal. She said she "couldn't actually believe" how much more competitive other quotations were at that stage.
How the saving was made
Kath got the quote - £637 compared to the initial figure of £1,226 - from an insurer belonging to the same parent company. This led Martin to say that there were "loopholes" which people needed to grasp when arranging car and home insurance.
He explained: "You may have heard that they got rid of the idea that existing customers could be charged more than new customers. But the law on that is very specific."
The loopholes in the law
Martin detailed how the regulations work in practice. He said: "Existing customers can't be charged more than new customers going via the same channel. It's channel specific. So what that means is if you went by one comparison site then the next year a new customer going via that comparison site could not be given a cheaper price than you in exactly the same situation on the same comparison site."
He added: "But they could be charged less on a different comparison site, or going direct, or going through a different route. So there are a lot of loopholes in that law."
The sweet spot for renewals
After haggling initially with her insurer and being offered a £100 reduction, Kath turned to comparison websites to search for alternatives. She said: "I couldn't actually believe how low. I thought there must be a catch here. This can't be right."
This happened with just 22 days left until her renewal deadline. Martin - familiar to ITV audiences from the Martin Lewis Money Show and to BBC listeners for his Martin Lewis Podcast on Radio 5 - describes this timeframe as "the sweet spot".
FCA rules on renewal pricing
Rules brought in by the Financial Conduct Authority in 2022 say that renewal quotes for home and motor insurance customers must not exceed those available to new customers. The FCA says the regulations mean "insurers will be required to offer renewing customers a price that is no higher than they would pay as a new customer."
The new rules governing car insurance took effect on 1 January 2022. At the time they were announced, Sheldon Mills, Executive Director, Consumers and Competition at the FCA, said: "These measures will put an end to the very high prices paid by many loyal customers. Consumers can still benefit from shopping around or negotiating with their current provider – but won't be charged more at renewal just for being an existing customer."
Nevertheless, Martin says the "loopholes" mean consumers should always shop around for alternative quotes before renewing their policy.
