Martin Lewis is all urging drivers to check their car insurance policy before new laws on renewal quotes come into force.
From January next year, insurers will be banned from charging existing customers more than new ones under measures to wipe out the so-called loyalty premium.
It means policyholders that renew will not pay more than someone who has just signed up.
However, Martin Lewis has warned it could actually lead to higher prices in the coming months.
Speaking in today’s MoneySavingExpert newsletter, Martin said: “With firms forced to offer new and existing customers the same prices, the new structure will likely meet somewhere a little above halfway between them.
“It’s good news for those who never switch, as renewals will be cheaper. But it’s bad news for those who actively seek the best deals. While they should still be able to save due to competition, differences will fall, and they’ll pay more overall.”
Lewis said in the next seven months, it is likely that some of the best switching deals will start to disappear as new pricing algorithms kick in.
“It’s possible today is a sweet spot to check car insurance and home insurance prices. While the new regime starts in January, insurers will likely start to shift algorithms before – there are even signs now.
“This likely means the cheapest prices will disappear rapidly for those who compare and switch. So I suggest everyone check ASAP to see if you can cut costs by grabbing cheaper switchers’ deals.”
If you’re approaching the end of your policy, you could shop around for cheaper deal now.
If you’re mid-policy, it’s still worth comparing prices.
“Even if not at renewal, if savings are big, it can be worth moving now to lock in cheaper prices,” Lewis said.
Most insurers will let you switch for a £50 cancellation fee, but if the savings are big, it could still be worth it.
You’ll get any refunds owed on a pro-rata basis, but be aware, you may lose your 12 month no claims discount for the year.
We’ve got a full guide on how to shop around for cheap car insurance here.
While comparison websites are known for their exclusive offers (free car wash with Confused.com, Meerkat Movies etc), remember to check those that are not on these sites too, such as Direct Line.
Cashback websites are also a great way to pocket a few pounds if you’re moving to a new provider.
Martin Lewis also advises shopping around three weeks before your existing policy is due to end.
MSE research suggests the optimal time to bargain hunt is 23 days before the policy is due to start.
New ‘price-walking’ rules from January 2022
Many firms increase prices for existing customers at renewal in a practice known as price walking.
They use sophisticated processes to target the best deals at customers who they think will not switch in the future and will therefore pay more in the long run.
It’s part of the reason why people are encouraged to shop around and switch every year.
At the same time, these companies ar offering below-cost prices to new customers to lure them in.
The FCA’s new rules will ban price walking from January next year.
The law change will protect people from the so called ‘loyalty premium ’. In a nutshell, it means your renewal price will not be higher than it would have been if you joined the same company as a new customer.
It said these measures will save consumers £4.2billion over 10 years.
Martin Lewis’s car insurance tips
Never settle for the upfront cost – haggle with your insurer after getting your quote, you may also get a cheaper deal if you renew online.
Beware of monthly payments – breaking it down typically tends to cost more in the long run
Use a cashback website after you’ve found the right policy – TopCashback and Quidco may be able to knock hundreds off your policy. But be aware, you won’t be able to combine comparison deals with cashback.