A Liverpool woman has told Martin Lewis she saved hundreds of pounds on her car insurance after following his advice to search for new quotes 23 days before renewal. Kath from Liverpool appeared on the Martin Lewis Podcast to explain how she secured a quote of £637 instead of the initial renewal quote of £1,226 – a saving of £589.
How Kath saved £589
Kath's initial renewal quote came in £376 higher than expected, despite her premiums having fallen in the preceding couple of years. After haggling, she was offered £100 off, before deciding to check comparison sites for alternative quotes.
She said: "I couldn't actually believe how low. I thought there must be a catch here. This can't be right." This was with 22 days remaining before her renewal date – a window Martin refers to as "the sweet spot".
Loopholes in the law
Rules introduced by the Financial Conduct Authority in 2022 mean that renewal quotes for home and motor insurance customers are not supposed to be more expensive than those offered to new customers. The FCA says the rules mean "insurers will be required to offer renewing customers a price that is no higher than they would pay as a new customer."
However, Martin Lewis says there are "loopholes in the law". He said: "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.
"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.
"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."
FCA rules and the sweet spot
The new regulations on car insurance took effect on 1 January 2022. When 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.
"We are making the insurance market work better for millions of people. We will be watching closely to see how the market develops in the future and to ensure firms continue to deliver fairer value to consumers."
Martin argues that these "loopholes" mean consumers should always shop around for alternative quotes before renewing their policy.
