Martin Lewis' Money Saving Expert has issued a warning to every UK household and vehicle owner regarding upcoming insurance changes.
The financial guru's website detailed the "monumental shake-up' in its most recent newsletter.
It stated that the new changes would primarily affect those who have either vehicle insurance or home insurance - or both - and stated it was the 'biggest" overhaul he could "remember".
READ MORE - Aldi vs Tesco: I did my weekly shop at both to see which was cheaper
Within the newsletter, it was also explained that the impetus behind the reworks was an effort to put a stop price walking, wherein consumers who renew their policy each year are faced with price increases, while brand new customers are offered superior deals.
It continued: “On 1 January 2022, regulator the Financial Conduct Authority brings in new insurance rules. They primarily apply to vehicle insurance (car, motorbike, van) and home insurance (buildings and contents), but it's a monumental shake-up - the biggest I remember.”
To try and help consumers make sense of the insurance changes, Lewis put together a list of 12 of the most important points to understand.
As reported by the Daily Record, here are some of the key takeaways.
Car and home insurance changes from January 1, 2022
MSE explained: “The loyalty premium has long been a bone of contention. It's great news for those who don't switch, or do but don't want the hassle. The rules say insurers must prove, on aggregate, that they charge new and existing customers the same, including any vouchers or cashback.”
Martin’s prediction on price matching for all customers
While the money expert has no guarantee of how firms will tackle the rule change, his guess is that they won’t just cut renewals to match newbies' prices.
It went on: “They'll drop 'em somewhat, and increase new-customer rates - meeting towards the middle.
“Don't think savings by switching will end totally though. Different insurers will still have different prices - and new entrants will try to disrupt the market - but savings will likely be smaller.”
Insurance rates may change before January
The prediction here is that as implementing the rule change is such a big job, many insurers “will likely start to shift pricing algorithms sooner” which means cheap deals around just now may disappear “within weeks or months”.
Use more than one comparison to find best deal
“Comparison sites are actually technically insurance marketplaces, as insurers are allowed to, and sometimes do, offer cheaper prices on individual sites than they charge direct,” it states.
MSE advises using at least two different comparison websites to find the best deal.
Get quotes 23 days before policy is due for renewal
This is something MSE has pushed before, as the timing of your renewal could make a huge difference to your bank balance.
MSE stated: “We analysed over 70 million quotes, and found the optimum time to get new car insurance quotes is 23 days ahead of renewal (21 days for home), but anytime around three weeks is good.
“Leave it later and car insurance prices can almost double because insurers' algorithms show those who get new quotes earlier are a lower risk (the rise is far less steep with home insurance).”
To read all 12 car and home insurance need-to-knows, visit the MoneySavingExpert website here.
