Important Changes to Home & Car Insurance Rules 2022

The Insurance ‘Loyalty Penalty’ Ends in 2022. How Will This Affect You?

insurance changes

Changes to Home & Car Insurance Rules UK

insurance changes 2022

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 will be banned from quoting their existing customers a higher price for renewing their insurance than they’d pay if they were a new customer. 

This means that premiums charged by insurance providers to any renewing insurance customers cannot be greater than the price they would charge to an equivalent new customer for the same policy. 

This new insurance rule aims to stop the currently widespread practice of ‘price walking’, where insurers increase premiums each year for their existing customers. It also means the end of exclusive discounts for new insurance customers. 

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. 

Many will welcome these changes, as they will remove excessive price differences in the premiums paid by some new and existing customers for equivalent policies. 

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Will Switchers Lose Out Under the New Rules?

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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: 

  • A customer’s age
  • The type of vehicle 
  • Their driving record 
  • Claims history 

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: 

  • Your needs – it is crucial that you buy the policy that most closely meet your needs, not automatically opting for the cheapest cover.
  • Renewal terms – if considering renewing with your current issuer, check their renewal terms to make sure you’re aware of any price changes, scope of cover, new conditions and changes in your circumstances that you might need to inform your insurer of. 
  • Shop around – the insurance market will continue to be competitive, with a wide range of policies available from a range of providers so it might still be worth comparing policies. 

What Will Change Next Time You Renew?

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When you next renew your insurance policy, there may be a few changes. 

  • Deals might disappear – some of the discounted deals that were on offer might not be available now the new rules are in place. The new insurance changes could result in fewer enticing introductory premiums for new customers. 
  • Your renewal premium may still go up – a number of factors, such as whether you have made a claim in the past year; whether your risk has changed; or external factors (e.g. increased cost of vehicle repairs) could all impact on the price of your insurance renewal
  • Auto-renewal will continue – some insurance policies renew automatically after a year if you do nothing. This ensures you don’t find yourself inadvertently uninsured because you forgot to renew. But, the new rules will make it easier to cancel the auto-renewal of some policies. 

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. 

What’s Happening with Premiums Now?

insurance rule changes 2022

Recently, average car insurance premiums have been falling. According to ABI, the average price paid for insurance cover between July and September 2021 was £429. 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 premium reductions are likely a result of  recent lockdowns, when there was a drop in vehicle accidents due to fewer drivers on the roads.

There has also been speculation that some insurers have been making the most of the time before these insurance rules came into action. They have taken advantage of attractive discounts to win over new customer ahead of the loyalty penalty ban. 

According to statistics from, average home insurance premiums have also declined – though only 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. 

How to Get the Cheapest Insurance Deals in 2022

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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 won’t mean that the first price your insurer offers you is the best you can get. Most of the time-tested tactics in getting the best deal will still pay off in 2022 and beyond. 

Here are out top tips for getting the best car and home insurance deals in 2022:

  • Switch insurer – the insurance market is still expected to remain competitive, so your car or home insurer will still have rivals that might be able to offer you a better deal. 
  • Check multiple comparison sites – do this regularly to see what quotes other insurers are offering you for comparable cover. 
  • Negotiate with insurers – it sensible to assume that the first price an insurer offers isn’t the best they can do. The change in rules won’t stop insurers giving better prices to customers who haggle. 
  • Get quotes through different channels – whether you buy insurance through the phone, online, a comparison site, a broker or direct, it can have an impact on your price, and this will continue to be the case after the new rules come in. 
  • Check your policy suits your needs – don’t just opt for the cheapest deal if it doesn’t cover your needs. Spend some time reading the documentation to ensure it’s not just a waste of money. 


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