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.
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, 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 MoneySuperMarket.com, 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.
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: