are new car policies always cheaper than renewals?

Ferris

Hi,
I'm a bit new to car insurance etc. I've been reading lots of posts and articles on MSE and others saying that it is ALWAYS cheaper to start a new policy (with quidco etc) than accept your insurer's renewal quote.

However, I've run a sample quote through the insurer's website (swiftcover) with all the same details as the renewal quote (the only thing different is the names and a few days on the dates of birth), and the new quote is £103 more expensive than the renewal quote. Obviously if quidco tracks and pays this will be reduced by £45, but it is still more than £50 more expensive. Is this normal? I feel I must be missing something!

Any thoughts?

mattymoo

Depends on any introductory offer the new company is offering. Direct Line / Tesco often have 20% off deals for new customers online for instance.

Also worth checking that you haven't changed something since you took the original policy out, that might result in the renewal premium increasing. For instance, change of job / conviction.

Ferris

mattymoo wrote: »

Depends on any introductory offer the new company is offering. Direct Line / Tesco often have 20% off deals for new customers online for instance.

Also worth checking that you haven't changed something since you took the original policy out, that might result in the renewal premium increasing. For instance, change of job / conviction.

hi, thanks for the reply, but i think you might have misunderstood me. in my case the cost of taking out a brand new policy is £100 more expensive than the renewal quote. the renewal quote is much cheaper, even though both quotes have near identical details (only difference is names and a few days on the dates of birth).

obviously this isn't a problem as i can just go with the renewal quote, but i'm just curious as the conventional wisdom on MSE seems to be that companies try to screw you over on the renewal, and it is always better to cancel at the end of 12 months and take out a new policy (with quidco) to get the best price. am i missing something obvious?

finbow

I have found the same, since having my direct line policy everytime the renewal came, dispite vigorious shopping around, its significantly cheaper than any other quote including pretending to be a new customer from their site, and any other potential cash back.

Add to this that everytime I renew Directline have increased their level of cover, you obviously can't always beat ur renewal.

I wonder weather some insurance companies really want to keep certain customers, i.e they fall in their demographic?

Also never understood why stating I'm a student I get a lower quote than if I was say a sales assistant..... The curious world of insurance.

mattymoo

Ferris wrote: »

hi, thanks for the reply, but i think you might have misunderstood me. in my case the cost of taking out a brand new policy is £100 more expensive than the renewal quote. the renewal quote is much cheaper, even though both quotes have near identical details (only difference is names and a few days on the dates of birth).

I did understand, just didn't explain it very well. Try again

Renewal premium is based on info the insurer already holds about you.
Your shopping around exercise is based on info you are providing today. If something has changed, like job / conviction history / address etc, then the new quotes will show that. If you haven't told your insurers they will be basing it on out of date info. When corrected, it might raise the renewal premium.

The reason I mentioned intro discounts was to explain where other comments where coming from about renewal normally being more than new quotes. Insurers give intro discounts in the first year. These do not feature in the renewal premium hence it being higher than new quotes - usually.

There is a feeling that the insurance market is hardening. All to do with supply and demand but basically insurance has a market cycle.

Soft market - lots of firms competing for business, drives down the prices.
Hard market - firms start making losses (it takes 3 years to know whether you make a profit / loss because people can claim up to 3 years after an accident for injury) so they pull out of the market or increase their premiums to cover the losses.

It has been a soft market for around 5 years now and the usual cycle is 10 years so expect to see rates move upwards over the next 3-4 yrs.

Ferris

mattymoo wrote: »

I did understand, just didn't explain it very well. Try again

Renewal premium is based on info the insurer already holds about you.
Your shopping around exercise is based on info you are providing today. If something has changed, like job / conviction history / address etc, then the new quotes will show that. If you haven't told your insurers they will be basing it on out of date info. When corrected, it might raise the renewal premium.

ah, i get you sorry, that's the effect of checking messages afer midnight..

in this case, i have carefully ensured all info on the renewal is up-to-date, and then entered the same info for the new quote (side-by-side: one open in firefox, the other in IE).

however, even based on the old (last year's) info, taking a new quote with that info was still higher. i guess that's just the way with some companies *shrug* with two learner drivers on the policy i can't find anywhere to touch swiftcover on price...

Ferris

finbow wrote: »

Also never understood why stating I'm a student I get a lower quote than if I was say a sales assistant..... The curious world of insurance.

i've found this too. also noticed that changing my occupation from a student to teaching/academic (i'm a phd student paid for teaching) makes no difference to price whatsoever. my austere lecturers wouldn't be pleased with being the same risk as their debauched undergraduates...

Steve1981

mattymoo wrote: »

I did understand, just didn't explain it very well. Try again

Renewal premium is based on info the insurer already holds about you.
Your shopping around exercise is based on info you are providing today. If something has changed, like job / conviction history / address etc, then the new quotes will show that. If you haven't told your insurers they will be basing it on out of date info. When corrected, it might raise the renewal premium.

The reason I mentioned intro discounts was to explain where other comments where coming from about renewal normally being more than new quotes. Insurers give intro discounts in the first year. These do not feature in the renewal premium hence it being higher than new quotes - usually.

There is a feeling that the insurance market is hardening. All to do with supply and demand but basically insurance has a market cycle.

Soft market - lots of firms competing for business, drives down the prices.
Hard market - firms start making losses (it takes 3 years to know whether you make a profit / loss because people can claim up to 3 years after an accident for injury) so they pull out of the market or increase their premiums to cover the losses.

It has been a soft market for around 5 years now and the usual cycle is 10 years so expect to see rates move upwards over the next 3-4 yrs.

a very well written, educated and informed post - would be really nice to get a few more like these from time to time

thebarefootchef

NO, it's not always cheaper to be a new customer.

Against the popular wisdom on this site, I've been with Safeguard since buying my camper van 12 years ago.
Not only do they offer £3,000 pounds worth of camper contents, they are also the cheapest I've found.

So this year I did the 'new customer' exercise and guess what?

They give a £30 loyalty discount.

So that's another money saving myth then.

Incidentally, does anyone actually know any details of the bloke who got insurance for 26 quid?

Like how old he is?
What car he insured?
How old the vehicle was?
Rough area in the country?

I'm mid 40's so cheap to underwrite and could do with a cheap runabout.

Ferris

thanks for your replies, it's been very enlightening!

another question from an insurance newbie... is it normal for cancellation refund rates to be as bad as swiftcover's? for example, if you cancel after 180 days (roughly halfway through the policy) with no claims, you still only receive 30% of the premium back? that seems pretty harsh. is it normal? for all i know, it might be exceptionally good (or bad)!