Check your renewal T&C VERY closely

edited 30 November -1 at 1:00AM in Insurance & Life Assurance
12 replies 1.1K views
foggytownfoggytown Forumite
325 Posts
edited 30 November -1 at 1:00AM in Insurance & Life Assurance
They all seem to be doing it now, but they aren't exactly trumpeting the fact. I speak of the "automatic renewal" feature (scam?) being adopted by auto and household insurers. Churchill is the latest I've noticed. They say it's because most of their insureds renew with them anyway and that automatic renewal is safer and more convenient. What a load of cynical crap! By putting the onus on the insured to cancel the policy before renewal, insurers are playing the old inertia game - hoping to snag a few more renewals at inflated rates and depriving the insureds of the ability to look for better deals. Worst case, insured gets quotes from another insurer, decides to switch insurers, doesn't cancel the automatic renewal, and ends up with TWO policies. When the error is discovered, insured tries to cancel with Churchill and gets hit with a big cancellation fee AND usurous short term cancellation rates.

And consider this: if the automatic renewal wasn't part of the expiring policy, how can Churchill introduce it now for the renewal of that policy? Looks like a unilateral change of the contract to me!

Another trick: maybe the premium didn't increase that much, but check the excesses which probably have. It's just a back door way of increasing premiums. If there are no claims then it doesn't matter that the premium wasn't increased. But if there is a claim, then the premium for that vehicle has effectively increased by the difference between the expiring and the renewal excesses. Cute?

I'm sure the insurance watchdogs have some function. I wonder what it might be? :huh:
42 years of experience in the insurance industry.
And nothing the industry tries do to us surprises me any more!
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Replies

  • dunstonhdunstonh Forumite
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    They say it's because most of their insureds renew with them anyway and that automatic renewal is safer and more convenient. What a load of cynical crap!

    Actually, they are correct. The figures for most insurers are around 70% renew with the same insurer each year. So, automatic renewal benefits the vast majority.
    By putting the onus on the insured to cancel the policy before renewal, insurers are playing the old inertia game

    Which is common sense for them to do. They are not charities and have a responsibility to keep and grow their business.
    And consider this: if the automatic renewal wasn't part of the expiring policy, how can Churchill introduce it now for the renewal of that policy? Looks like a unilateral change of the contract to me!

    Renewals allow them to amend conditions.
    I'm sure the insurance watchdogs have some function. I wonder what it might be? :huh:

    To make sure companies comply with rules. Not for consumers who don't read their post.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • placidoplacido Forumite
    83 Posts
    Like you, I got annoyed with firms who seemed to automatically renew my policies. First of all the RAC who renewed my legal cover; I sent them a ratty email. However, since then I have learned (on MSE) that legal cover is essential. So now I am happy for them to auto renew. In fact what actually happens is that they notify me a few weeks before they actually do it and hence I have the opportunity to decline the offer.

    Also with home insurance. For some reason there was an issue with my home insurance last year (I had not made any claims) and there was a delay in renewal. I would be more than happy for them just to auto renew next year and save any hassle. Like the RAC the insurance (brokers) notify me before they renew and so I have the opportunity to check out the new deal and cancel if necessary.
  • mattymoomattymoo Forumite
    2.4K Posts
    foggytown wrote: »
    ... and depriving the insureds of the ability to look for better deals.

    How does auto renewal do that? There is nothing stopping the customer from looking for a better deal.
  • foggytownfoggytown Forumite
    325 Posts
    dunstonh wrote: »
    Actually, they are correct. The figures for most insurers are around 70% renew with the same insurer each year. So, automatic renewal benefits the vast majority.

    Which is common sense for them to do. They are not charities and have a responsibility to keep and grow their business.

    Renewals allow them to amend conditions.

    To make sure companies comply with rules. Not for consumers who don't read their post.

    So, you agree with the use of sharp practices to maximize profits. Interesting.

    Renewals don't allow them to amend conditions that allready exist prior to the renewal date. If the expiring contract didn't contain the provision for automatic renewal then they can't automatically renew the expiring contract.
    42 years of experience in the insurance industry.
    And nothing the industry tries do to us surprises me any more!
  • foggytownfoggytown Forumite
    325 Posts
    mattymoo wrote: »
    How does auto renewal do that? There is nothing stopping the customer from looking for a better deal.

    If a customer is unaware that the policy will be renewed unless they actively decline the renewal, instead of just not renewing as it always has been.
    42 years of experience in the insurance industry.
    And nothing the industry tries do to us surprises me any more!
  • dunstonhdunstonh Forumite
    106.7K Posts
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
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    So, you agree with the use of sharp practices to maximize profits. Interesting.

    I dont see anything about auto renewal as a sharp practice. The majority benefit. It doesnt stop you doing your own checks and deciding to change provider if you wish.

    The only thing it does is make a minority of people have to contact them to say they dont want it. Not a big deal and not a sharp practice.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • adamc260adamc260 Forumite
    2.1K Posts
    It's done in your best interests too, assume you go on holiday and forget to renew your car insurance, come back to find someone smashed into it writing your car off and they drove off? You would be uninsured with a wrecked car that you'd have to foot the bill for. I guess you aint looked at it like that (someone else may of mentioned this I didn't read everyone elses posts)
  • marshallkamarshallka Forumite
    14.6K Posts
    I never accept the automatic renewal. Its often over £100 more than taking out the policy yourself online. I know with Direct Line home insurance twice now our same "exact" policy is over £100 cheaper online. Why don't they treat their loyal customers right and find them the cheapest insurance for automatic renewal. So annoying.
  • adamc260adamc260 Forumite
    2.1K Posts
    marshallka wrote: »
    I never accept the automatic renewal. Its often over £100 more than taking out the policy yourself online. I know with Direct Line home insurance twice now our same "exact" policy is over £100 cheaper online. Why don't they treat their loyal customers right and find them the cheapest insurance for automatic renewal. So annoying.

    They assume you'll be 'lazy' and just accept it and make money :) Anyone with common sense would shop around though
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