DRIVEN UP THE WALL
Martin Lewis warns drivers over ‘ridiculous rule’ car insurance firms use to charge motorists double
The Money Saving Expert also revealed the ideal time motorists should renew their policy to secure the cheapest agreement
MARTIN Lewis has warned drivers over a "ridiculous rule" that could see them pay double the price for their car insurance.
The Money Saving Expert revealed how insurance firms determine a motorists renewal price based on their "actuarial risk”.
2
2
Securing a new deal weeks before an existing contract ends is likely to show a driver is less rushed and could pay off with better prices.
So the later you leave it, the more you're likely to be charged for your yearly renewal.
That obviously means the earlier you sort things, the cheaper it will be.
But stunningly, Lewis admitted how some companies were charging up to 100 percent more for those who left it right until the last minute.
Read more in Motors
“It seems absolutely ridiculous but insurance pricing is all about actuarial risk," he told ITV's Tonight programme.
"And what their risk shows them is the type of people who get car insurance early are a lower risk so they give them a lower price.
“You might pay nearly double if you wait until the last minute to get your car insurance.”
However, the money expert also revealed the ideal time motorists should renew their policy to secure the cheapest agreement.
Most read in Motors
He said: “The perfect time to get car insurance is 23 days before your renewal.
Martin Lewis On Car Finance Scandal
"That’s not for your renewal quote, that’s for going onto comparisons to get different quotes," he explained.
As a result, motorists could save themselves hundreds of pounds by acting quickly and securing a deal around three weeks before a renewal deadline.
But analysis of 70 million quotes across a series of comparison sites found the average quote made on the day of renewal was £1,198, according to .
Yet incredibly, road users would be able to get the same contract for just £694 if they renewed 23 days earlier.
That's a whopping £504 difference that motorists could save themselves.
However, Lewis' reveal acts as a major boost for cash-strapped motorists.
Specialists at MoneySuperMarket have also suggested securing a policy between 15 and 29 days before renewal would likely pay off.
Leaving it any later and you're almost guaranteed to see a substantial rise in the price you'll have to pay.
Therefore, motorists who have missed the 23-day mark should still act quickly as a form of damage limitation.
MoneySuperMarket explained: “According to our research, car insurance premiums start to go up within two weeks of your current policy ending, and the sharpest rise comes around three days before.
“So as long as you buy before then you should avoid the big price hike reserved for those who leave it until the last minute.”
Money Saving Expert has also released a free tool to check if drivers are owed thousands in car finance claims.
The scandal involved dealers that were allegedly buffing up interest rates for car-buyers so they could claim higher commission fees.
READ MORE SUN STORIES
It comes after Lewis revealed that thousands of Brits may be due compensation if they get a car finance scandal "winner email".
Industry insiders have blown the whistle on allegedly dodgy loan deals, telling Sun Motors: "We knew what we were doing was wrong."
Topics