Letting your car insurance auto-renew could be costing you heavily, according to the latest study.

On average drivers who let insurance policy auto-renew will see their premium increase by £42, new research shows.

The research by MoneySuperMarket reveals that 17.1 million drivers let their car insurance auto-renew last year at a cost of £720 million - a seven per-cent increase on last year (£674 million).

The leading price comparison site found 41 per-cent of drivers let their car insurance policy renew automatically – the same percentage as 2019.

Drivers saw their premiums increase by £42 on average.

One in five saw jumps between £26 and £50, while one in 10 saw rises between £51 to £75 and £76 to £100.

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If you let your insurance auto-renew, you are not alone. 

Nearly one in ten drivers allow their insurance to renew automatically without shopping around for a cheaper deal, with 20 per-cent of people staying with their existing provider for ease.

A tenth believe changing car insurance provider is too much time or effort, and a further tenth do not believe there are significant savings to be made.

Kate Devine, car insurance expert at MoneySuperMarket, said: “Letting your car insurance auto-renew almost always sees you end up paying more, with our research showing that the average premium increase last year was £42.

"While it’s great to see that many of us are shopping around for a better deal, the number of people allowing their policy to auto-renew is still high at 41 per-cent.

“If your policy is coming up for renewal, you should always shop around to see what deals are on the market - a new deal on your car insurance is very easy to find online and could save you up to £218.”

The Financial Conduct Authority’s transparency in insurance renewals rules that came into force in 2017 are intended to encourage drivers to shop around by highlighting, in a prominent manner, their previous year’s premium price against their renewal price, alerting drivers to any increase or decrease.

Despite this, half of drivers do not recall seeing these notifications.

Of the remaining half that did see the notifications, a third said that they did not encourage them to shop around.

According to MoneySuperMarket:

  • Loyalty to your provider leads to an average price increase of £42 a year
  • FCA auto-renewal notification rules go unnoticed by half (51 per-cent) of drivers
  • Average premiums for fully comprehensive car insurance cost £490 – a fall of 3% - or £13 - over the last year

MoneySuperMarket’s research also reveals that the cost of an average premium decreased by three per-cent year-on-year  - from £503 in Q4 2019 to £490 in Q4 2020.

However premiums actually increased by 3.65 per-cent from £473 in Q3 to £490 in Q4 of 2020.

Residents of East London had the most expensive premiums in Q4 2020 (£955) – over double the UK average.

London as a whole had an average premium of £690, compared to £330 in the South West. Whilst Kirkwall in Scotland (£269) had the cheapest premiums in the UK.