As of the 1st January, important changes are being made to home and car insurance rules.
The insurance ‘loyalty penalty’ has become a thing of the past. From now on, car and home insurers won’t be able to quote their existing customers more for renewing their insurance compared to new customers.
This means that insurance providers cannot charge higher premiums to renewing customers than they would charge to an equivalent brand-new customer for the same policy.
This new insurance rule aims to stop the currently widespread practice of ‘price walking’. This refers to when insurers increase their premiums for their existing customers each year. It also means new customers won’t have access to exclusive deals.
Although most customers shop around for their home and motor insurance every year, those who don’t have effectively been charged a ‘loyalty penalty’ for remaining with the same firm.
These changes will be beneficial to some, as they will get rid of excessive differences in the prices paid for premiums by new customers and existing customers for equivalent insurance policies.
The new 2022 car and home insurance rules mean that loyal customers should be protected from huge price hikes when renewing their car and home insurance policies.
The Financial Conduct Authority (FCA) has itself acknowledged that these changes will likely lead to some customers paying higher prices, especially if they have previously benefited from big new-customer discounts.
However, this would mean that customers couldn’t shop around and use comparison sites to find the cheapest and best deal for them.
Therefore, under the new insurance rules, premiums will continue to be calculated independently by insurers, using a wide range of factors. For example, for motor insurance these factors will include:
So, when it comes to renewing your home or car insurance, it might be best to consider your options before sticking or switching providers. Some of the things you should consider when renewing your home and car insurance under the new rules include:
When you next renew your insurance policy, there may be a few changes.
All of these changes to insurance will apply regardless of whether you buy insurance from an insurer, an insurance broker, a comparison website or a retailer.
Recently, the average price of car insurance premiums has been falling. According to ABI, £429 was the average price paid for insurance cover between July and September of 2021. This is 7% lower than it was a year earlier, and the lowest it’s been in over five years.
However, this trend may not be set to continue. Recent reductions in premium prices have likely resulted from the impact of Covid-19 and the lockdowns. During this time, there was a drop in vehicle-related accidents due to fewer motorists driving on the roads.
Many have also speculated that some insurers might have been taking advantage of the time before these insurance rules were introduced.
They have taken advantage of attractive discounts to win over new customer ahead of the loyalty penalty ban.
According to data from MoneySuperMarket.com, the average price of home insurance premiums has also dropped, but not by as much. In fact, home insurance premiums have only declined by 5.1% since their peak in 2020.
Nevertheless, with both home and car insurance, the run-up to 2022 has offered a prime opportunity to benefit from new customer deals.
So, with these new insurance rules coming into play, how can you get the best insurance deals in 2022?
While the loyalty penalty ban is expected to make insurance pricing fairer, it will mean that customers who regularly switch providers lose a long-enjoyed advantage.
However, this doesn’t mean you should accept the first price your insurer provides you as the best you can get. Tactics like shopping around and comparing deals will still be beneficial in 2022 and beyond.
Here are out top tips for getting the best car and home insurance deals in 2022: