New rules to end the controversial “loyalty penalty” for car and home insurance customers are being brought in from today.
The term “loyalty penalty” is used to describe price increases for customers who stick with the same insurance provider year after year and don’t shop around.
Many firms will offer cheaper deals to entice new customers, leaving loyal customers paying over the odds for sticking with the same insurance company.
The new measures - first announced back in May 2021 - will put an end to this and should, in effect, mean existing policy holders won’t be more than new customers.
The finance watchdog, the Financial Conduct Authority (FCA), estimates Brits could save £4.2billion over 10 years because of the insurance shake-up.
But some experts have warned how it could spell the end of cheap new switcher deals for those who always shop around.
Martin Lewis, founder of MoneySavingExpert, warned back in October 2021 that insurance firms could increase new customer rates to “meet in the middle” as a result.
He said: "My guess is firms won't just cut renewals to match newbies' prices.
"They'll drop 'em somewhat, and increase new-customer rates - meeting towards the middle."
A similar warning was also issued by Sarah Coles, personal finance expert at Hargreaves Lansdown, last month.
She said: "This will effectively kill off the practice of ‘price walking’.
"It’s good news for those who stick with one provider, but it’s likely to mean the end of very cheap deals for those who are prepared to keep switching."
How to lower your car or home insurance
There are a few things you can do to make sure you're getting the best deal for your home and car insurance.
The most obvious one is to always shop around and compare prices - even with the new "loyalty penalty" rules now in effect.
Make sure you always compare prices on multiple sites, as some insurance firms won't be covered across all the major comparison websites.
Some of the most popular ones include CompareTheMarket.com, GoCompare.com and Confused.com.
Have you managed to save a load of money on your car insurance? Let us know: mirror.money.saving@mirror.co.uk
MoneySavingExpert says 23 days before your car insurance is due to expire is the prime time to find the cheapest deals.
For home insurance, you should be checking 21 days before.
If your household has more than one car, you should check if a multicar deal could save you cash.
Legitimately tweaking your job title on your car insurance policy could also lower your costs - as long as the job title you pick can accurately be used to describe your job.
You can’t outright lie about your job title as you could risk being accused of fraud and having your insurance invalidated.
Finally, you should also see if you'd be eligible for cashback on your car or home insurance on sites such as Topcashback and Quidco.
If you're happy with your current insurance provider, you can still try haggling for a lower price.
Check if there are cheaper deals out there, then call your provider up and ask if they can match it.
