Personal finance expert Martin Lewis has given followers an update on car insurance - and most importantly when to seek it. On X, formerly Twitter Mr Lewis highlighted how a fan had managed to get a big cut - but following his advice.
The Money Saving Expert founder has previously said there is a ‘perfect day’ to look for alternative quotes - and it’s a length of time before your policy finishes. Failing to do it at the right time means people will probably end up paying more.
It’s especially vital currently because car insurance has soared so high - latest figures from comparison site Compare The Market show that the average car insurance premium increased by 52 per cent year-on-year in December to rise to £950 per year.
Replying to Mr Lewis on X, one fan said: “@MartinSLewis big thanks for saving me ££ on my car insurance renewal this year. Last year's annual policy was £354 with Sainsbury. Followed the guidance to search 22 days before renewal date and got a new policy for £299 with Tesco! That’s CHEAPER than last year. Woohoo.” Another person agreed, saying: “Similar story for me, OH ignored the advice and was stuck with a huge increase. I was amazed at the sweet spot of 3 weeks - it really works.”
Martin Lewis has said that looking for car insurance a month before your policy ends is too soon - and said in his experience the best time to get results is around 21 days before then. Mr Lewis previously said on his Martin Lewis Money Show Live: “This is not about your renewal price it’s about the cheapest price you’ll get on a comparison website on the days before you renew. If you try and get a quote 30 days before, the price is pretty high, then it drops pretty rapidly - the sweet spot is around 21 days but anything around three or four weeks [in advance is worth trying]. Then it goes up and up until we’re talking about renewing at the last moment, which is nearly twice the cost.
“There is a reason. Insurance pricing is based on risk. And if you are the type of person who leaves it till the last minute, their risk charts show you’re a more risky person so they’ll charge you more. So play their risk odds against them and renew earlier in that sweet spot of three to four weeks.”
Earlier this year consumer group Which? said customers who buy cover monthly can end up paying hundreds of pounds more than those who pay for policies annually. The consumer group used data from comparison website Go.Compare to find the average difference between prices paid by annual and monthly customers between December 2018 and September 2023.
In September 2023, those paying monthly for an annual policy faced paying around £309 more on average over the year than those paying in one go, according to the research. The average annual cost of monthly payments was £892, while the cost of paying annually in one go was £583.
In September 2022, the average gap was £251 (£738 for monthly payments versus £487 for paying annually). In December 2018, the typical gap was £207 (£460 for paying annually versus £667 for paying monthly).
Younger motorists, who often pay the highest premiums, may be more likely to pay monthly, Which? said.
Rocio Concha, Which? director of policy and advocacy, said: “Car insurance is a legal requirement for motorists – and yet those who can’t afford to pay in one go annually are often being penalised through unjustifiably high interest rates on their monthly repayments. That isn’t right – and it’s now up to the financial regulator to outline an action plan to tackle the unfair costs of paying monthly for insurance.
“The FCA must monitor the issue closely, publishing an analysis every six months of firms’ rates, naming and shaming the worst providers. The regulator should also assess how much it costs firms to provide premium credit and shouldn’t hesitate to take action against providers charging monthly customers excessive interest rates.”
