Martin Lewis warning as new car insurance rules to affect every driver

By Lottie Gibbons

Martin Lewis has issued a warning to anyone buying car insurance.

Earlier this year, the Financial Conduct Authority announced several new rules to improve competition and protect home and motor insurance customers from loyalty penalties.

This includes new rules so that renewal quotes f or home and motor insurance consumers are not more expensive than they would be for new customers.

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Many firms increase prices for existing customers each year at renewal, this is known as price walking.

This means that consumers have to shop around and switch every year to avoid paying higher prices for being loyal.

The FCA found that millions of home and motor insurance customers lose out if they renew repeatedly with their current providers.

In 2018, 6 million loyal policy holders would have saved £1.2 billion had they paid the average price for their actual risk.

The pricing, auto-renewal and data reporting remedies come into effect on January 1 2022. The rules on systems and controls, product governance and premium finance took effect from the end of September 2021.

The rules affect car and home insurance.

But Martin said now might be the best time to start looking for a cheap deal.

In his latest newsletter, he said: "While the new regime officially starts in January, as it's a big job, insurers will likely start to shift pricing algorithms sooner, so the clock is ticking and the cheapest prices may start to disappear within weeks or months.

"If you can, you'll need to cancel your existing policy, and provided you've not claimed or reported an incident this insurance year.

"You should get a pro-rata refund for the rest of the year minus a £30 to £50ish one-off admin fee. Factor that in to any savings.

"You might not earn this year's no-claims bonus though.

"Even if you can't save now, but can match your current price, it may be worth doing in case prices rise. This is far shakier territory though, as it involves some crystal-ball gazing. So I'll leave it up to you."

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