6 million are overpaying for their insurance

Millions of policy holders are overpaying for insurance for their home and car, costing them an extra £200 per person per year on average a regulator has reported.

October 10, 2019

A recent report, published by the Financial Conduct Authority, revealed that some home and car insurance customers are paying high prices for insurance cover, in a market that doesn’t work well for consumers. 

While many people do shop around, many loyal customers don’t get a good deal. The FCA believes this affects around 6 million consumers, and is costing around £1.2 billion.

Loyalty really doesn’t pay

The FCA found to be true what many of us already know: insurers often sell policies at a discount to new customers and increase premiums when customers renew, targeting increases at those less likely to switch.

But it’s not just longstanding customers that don’t feel that loyalty pays. High prices were paid by some consumers that had been with their provider for less than 4 years.

The most vulnerable pay more

The study also revealed that 1 in 3 consumers who paid high prices showed at least one characteristic of vulnerability, such as having a lower income, going through bereavement or having health conditions impairing their ability to carry out day to day tasks.

For consumers who bought combined contents and building insurance, lower income consumers (below £30,000) pay higher margins than those with higher incomes.

Protect your money

The FCA are considering a range of industry-wide measures, but in the meantime are you doing all you can to protect your money?

Before you renew your home insurance make sure you shop around for the best deal. Read our guide on how to get the best home insurance deal .

Paula Higgins of the HomeOwners Alliance compels people to save money by taking charge. “Most of these companies do not reward customer loyalty. In fact many companies will only offer you a cheaper rate when you tell them you are leaving. Those who change providers regularly tend to get great deals paid by those who stay put. So shop around – and do it annually – to ensure you’re getting the right deal for you at the best price possible.”