Does Car Insurance Automatically Renew?

Does your car insurance automatically renew? 

If you don’t know the answer to that question, you could end up missing out on a better (and possibly) cheaper deal. 

To help you avoid the hassle, we’ll explain how auto-renewal works, how you can cancel your contract, and how to figure out if your insurance is worth renewing. 

Let’s dive in.

Does Car Insurance Automatically Renew?

Most car insurance policies have an auto-renewal clause in them, which outlines how the insurer handles the auto renewal process. 

If you have an auto-renewal clause in your policy, your insurance company will likely renew your policy near the expiry date. 

Depending on the clause, you can opt out and look for a better policy, but you’ll have to inform your provider that you don’t plan to renew your car insurance before the policy expires (within a certain timeframe). 

Is Auto-Renewal Legal?

Insurance companies can renew insurance quotes automatically, but they are required to follow certain regulations and guidelines, as well as ensure that their contractual terms are fair.

For example, under fair use rules, your insurance company has to inform you before the renewal that your policy is expiring and that it will be renewed if you don’t take active steps to prevent that from happening. 

Furthermore, the insurer should offer the policyholder the option not to renew the agreement after it expires, encourage them to shop around for potentially better deals, in case they need better coverage, and disclose last year’s policy price for comparison.

New car insurance renewal rules

The Financial Conduct Authority introduced new measures at the end of 2021, which went into effect in January 2022, that prohibit insurance companies from making renewal quotes more expensive than quotes for new customers.

The FCA said in its press release that it’s changing the rules regarding car insurance automatic renewal to prevent price walking and allow policyholders to stay with their insurance companies without having to face a hefty increase. 

Should You Auto-Renew Your Car Insurance Policy?

Renewing your car insurance policy with the same company has both advantages and disadvantages. 

Some benefits include:

• Avoiding the risk of your policy expiring and driving uninsured.
• Loyal customers might be offered a better deal. 
• You may get a No-Claim Bonus (NCB) (if you haven’t made any claims).
• You save time on comparing and looking for quotes.

On the downside, you could:

• Miss out on savings by not switching policies (renewed policy might be more expensive)
• Lose insurance deals that could give you better incentives and benefits.
• Miss the opportunity for a better cover.

Despite the possibility of finding a better cover and saving some money, more than half of UK drivers in 2021 let their insurance policy automatically renew, according to research conducted by MoneySuperMarket.

The percentage of UK citizens who allowed their insurance to be renewed jumped from 41% in 2020 to 52% in 2021, even as premiums rose by £49 on average. Still, 19% of motorists didn’t think that they would save much by switching policies.

Furthermore, 25% said they looked around for better deals, but stayed with the same company because it was convenient and 14% said they didn’t look for another provider because it was too much effort.

How To Stop Your Insurance From Auto-Renewing? 

Typically, your insurance company will reach out to you for the renewal of your car insurance 4 weeks before its due date. 

You can either wait for the company to contact you to inform them that you don’t want your insurance renewed or you can call your insurer and ask them not to auto-renew.

Those who plan to switch insurance providers should do it sooner rather than later. If you miss the deadline, you may have to pay a cancellation fee. 

In the meantime, you can shop around and see what other insurance providers have to offer or try to bargain with your current insurance company for better renewal car insurance.

Can You Cancel Your Car Insurance After It Has Auto-Renewed?

If you let your policy auto-renew and you’re still in the cooling off period, you can cancel but you may have to pay for the time you’ve been covered and charge an administration fee.

If more than 14 days have passed since your policy has auto-renewed, then you’ll likely have to pay a cancellation fee as well.

What Happens If My Policy Does Not Auto-Renew?

If your policy isn’t renewed and you don’t get a new one before or immediately after it expires, you will be left uninsured and would have to stop driving until you get new insurance.

Driving in the UK without insurance is illegal. A lapse in coverage will cost you a £300 fine and 6 penalty points and if the case goes to court, you might even end up losing your licence.

How To Renew Your Car Insurance

If your car insurance is up for auto renewal, here are a couple of things that you should consider:

• Examine the new offer – When your insurer sends you the new policy, usually about a month before the renewal date, make sure to spend some time and carefully read through it to ensure that you’ll get sufficient coverage and that you can afford the premiums (which will likely be higher). 

• Compare prices – There are plenty of websites where you can compare the price of your premiums to the average premium prices and deals offered by other insurers. This can help you figure out if you’re paying a fair price.

• Get quotes from other insurers – Even with the latest FCA changes, it’s always a good idea to shop around for other offers and see whether another insurance company offers more for the same price (or provides coverage that’s better suited for your circumstances).

• Pick the right coverage level – Check what each level of coverage offers and make sure you can afford the premiums before agreeing to renew the policy.

• Figure out what add-ons are worth the money – Even the most comprehensive insurance doesn’t cover everything. If you believe that you need something extra, you can ask your insurance provider for add-ons.

Bottom Line 

Most car insurance providers automatically renew policies when the contract expires to prevent customers from unintentionally breaking the law since driving without insurance in the UK is illegal. 

Regardless, they’re still obliged to inform you that the policy will be renewed and give you the opportunity to cancel the renewal and opt for a different deal or another provider.