You’ve been with your car insurer for coming up to a year (or even longer), and your current policy’s about to expire. The question is: should you stick with your existing provider, or switch to a new one? The only way to find out the best option for you is to shop around and compare deals. Whether you end up switching or not, it could save you a bundle. This guide explains when it might be better to renew or switch car insurance, and what to look for.
This may sound like a question with an obvious answer. But, just for the sake of clarity, “switching” is the term often bandied about for cancelling your car insurance with one provider and immediately starting a policy with a new insurer. You may also come across the term “transferring” your car insurance. This is usually used when you keep your policy with your existing provider, but transfer it to a different car. For example, if you sell your old car and buy a new one.
Most standard car insurance policies last for 12 months (or occasionally 10 months, in the case of no-claims bonus accelerator policies). For most people, the best time to think about switching car insurance is shortly before your current car insurance policy is due for renewal. At this point you have two main options:
There are a couple of other options too. One is to simply cancel your insurance without switching or renewing. You should only do this if you don’t plan to carry on driving, though, either because you’re getting rid of your car entirely, or you are declaring your car “off the road” through the official SORN process.
The other option is to try and negotiate a better deal with your existing provider. More on this later.
There are many general reasons that we’d recommend shopping around for car insurance every time it’s due for renewal.
As well as the general reasons why it’s a good idea to compare prices annually, there are a couple of specific drivers that could make it particularly worthwhile.
Have you changed car? Moved house? Got a new job? Picked up a few points on your licence? Your insurance may have been great value for money for your circumstances at when you first took it out. But insurers all weigh up risk factors slightly differently. Another insurer might be better if life has moved on.
The same applies if you want to add a new named driver to your policy. A son or daughter who’s recently passed their driving test, for example. Car insurance for young drivers is notoriously expensive, so it’s wise to look around for a provider that won’t cripple your bank account if you add your child to your insurance.
Following rules introduced in 2021, car insurers are no longer able to charge loyal customers more than new ones – doing away with a big chunk of the so-called “loyalty penalty”. Despite this, loyalty doesn’t usually pay. A combination of you being too busy to shop around and your insurer gradually increasing prices over time could mean you’re now paying substantially more than you would for equivalent cover from another provider.
Being able to go online and compare car insurers means that you can save a lot of money by playing the field. According to February 2024 data from insurance price benchmarking expert Consumer Intelligence, many customers could save more than £500 by switching their car insurance. You might not save quite this much, depending on your circumstances and your current premiums. But even £50 or £100 is a worthwhile saving at a time when pressures on the cost of living are causing many to feel the pinch.
Whether you switch or not, other ways you can save money when renewal rolls round include:
Provided it gets you a better deal, there are very few downsides to switching car insurance. It’s pretty straightforward and could save you money each year.
There are a few things to consider, though. These aren’t outright blockers, but could sway you against making the move just yet.
The first is that you may simply like your current insurer enough that saving a few quid doesn’t justify the risk of moving to an unknown provider. Perhaps your current provider has been particularly supportive at helping you through a claim, for example. Sometimes decisions are all about the bigger picture, rather than purely saving money.
Switching insurer can also get a bit more complicated if you have an unsettled claim with your current provider, regardless of how it’s handling it. If the decision hasn’t yet been made on who is at fault in a claim, you and any other driver involved will have “joint liability”. This can temporarily mean that your no-claims discount is up in the air, resulting in higher premiums if you shop around for quotes. If you do decide to switch, make sure you update your new insurer with your correct no-claims discount as soon as the claim has been resolved.
And there’s also a bit more to weigh up if you cancel mid-way through your policy term, rather than at the point of renewal. You’re likely to have to pay a cancellation fee to your existing provider. You also risk losing any no-claims discount you’ve built up over the months since you last took out a policy.
There’s no easy answer to that, as the best-value insurer for one person might not be the best for another. That’s because every insurer has different underwriting criteria. Some may treat younger drivers more favourably, while others might be better for those who live in urban areas. One thing we would say: don’t base your switching decision on price alone. Make sure any new policy you look at offers the right features and the right levels of cover, as well as a decent price.
If quality of cover and service is important to you, check out our guide to the best car insurance companies. We’ve surveyed hundreds of customers to find out how happy they are with their providers. We’ve also given comprehensive policies a policy score for the level of cover they provide, and picked out policies that excel in specific categories like multi-car or for young drivers.
If you’re switching at the point of renewal, changing car insurance shouldn’t cost anything. Once your policy term has completed, your contract has been fulfilled and your existing insurer can’t charge you to leave them.
If, on the other hand, you’re switching part way through a policy term, you can expect to pay a cancellation fee of up to £25 within the first two weeks, or up to around £60 if you cancel later.
If you’re considering switching but haven’t made the decision yet, let your current insurance company compete for your business.
Simply letting your insurer know thinking of switching and asking for a better deal might get you one. But you might have a higher chance of success – and of a bigger discount –if you’ve done your research into what competitors offer first. Here’s how to prepare for the discussion with your existing insurer.
If your current insurer won’t offer you a better deal or match a quote you’ve found, then it might be time to ditch them.
You can. But if you’re doing so purely to save money, make sure you take into account the costs involved in cancelling early.
You should get a pro-rata refund of premiums, less any days you’ve held the policy for. But cancelling an insurance policy mid-policy will almost certainly incur a cancellation fee. If you cancel within the initial 14-day cooling off period this is likely to be lower (probably no more than £25), and some insurers waive it entirely. But cancelling after this could set you back upwards of £50.
If you find a great deal that has all the features you need and will save you far more than the cancellation fee, then you might decide it’s worth sucking up these charges.
And, of course, some circumstances may force you to change insurers before your current policy expires. For example, a change in circumstances might mean that your current provider is no longer able to offer you cover – if you move or change car, and they don’t insure drivers in certain locations, or with certain models of car, for example. If you’re forced to switch insurer because your current provider can no longer cover you, ask it to waive the cancellation fee.
It’s also worth bearing in mind that if you switch part-way through a policy term, you will lose any no-claims bonus you’ve been building up since you took out the policy. That’s because no-claims bonuses don’t operate in fractions of years. You need to have accrued a full policy term of claim-free driving to benefit from another year’s worth of discount.
If you’re switching car insurance before your policy is over, follow these steps:
It never hurts to shop around to see if there’s a better deal to be had. You could save a lot of money, whether that’s through going through with the move, or simply using your research as ammo for a firm conversation with your current insurer. If you do decide to switch, use our guide to the best car insurance companies to help you choose a provider that will deliver on quality as well as price.
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