OPINION: Car insurance savings could reach £319

heavy traffic moving at speed on UK motorway in England at sunset.

Not searching for alternative car and home insurance options is costing people hundreds of pounds a year - Credit: Getty Images/iStockphoto

Consumers are ‘throwing away’ £3.3 billion by not checking their insurance.

One of the most alarming features of the 2008-09 recession was the steady emergence of a phenomenon known as ‘insurance dieting’.  

According to newspaper reports at the time, in an attempt to save money, almost one quarter of UK households, then estimated to number 6.5 million, cut back on their outgoings by dropping either buildings or contents insurance cover on their homes; some people jettisoned both as the phrase ‘insurance dieting’ entered the lexicon. 

Millions of people embarked upon this risky path believing they had no alternative; paradoxically, this savings-inspired move to put a temporary hold on buying home insurance cover served to fuel the growth of insurance comparison websites which urged people to check what other forms of insurance was available before putting their families in a potentially hazardous position.

Thirteen years on, as the world’s major economies struggle with a combination of rising inflation and sluggish economic performance, one wonders: could it happen again? Might we see the reappearance of insurance dieting? 

While some observers would clearly be delighted were the UK to slip into a recession deeper than the one we encountered in 2008-09, the fact is we’re not there yet*.  Nevertheless, economic activity remains fragile and steadily rising inflation could persuade folks to drop their home insurance cover and cross their fingers in the hope that they have no immediate need for it . 

Fortunately, unlike 2008-09, the internet’s growth and widespread access to it ensures that consumers prepared to invest the time and compare home insurance quotes could save hundreds of pounds and, ideally, avoid contending with a precarious, non-insured position.  

Most Read

Back in 2008-09, ‘insurance dieting’ failed to reach the car insurance market for the simple reason that if you want to take a vehicle on the road, insurance is compulsory.  

Yet the car insurance sector suffers from a problem just as acute as insurance dieting – inertia.  

Earlier this week, the personal finance website Moneymapp.com published research which found that when it comes to various forms of insurance, inertia amongst British consumers is absolutely rife. Moneymapp.com believes that widespread apathy has taken root, virtually guaranteeing that consumers are likely to be paying far too much for their insurance. 

In fact, analysis by Moneymapp.com revealed  that in the 12 months to July 2022, a staggering 14.2 million car and home owners simply renewed their insurance cover without bothering to look for a better deal. 

Ken Carter, Moneymapp’s head of insurance, said that failing to spend “just 15 minutes” searching for a less expensive home or car insurance deal  is costing consumers an average of £232.50 a year. “This means that in total, consumers are throwing away a colossal £3.3 billion in annual savings – an enormous number considering that as inflation soars, most folks are consciously trying to save money,” said Mr Carter.

To coincide with the publication of the research, this week Moneymapp.com increased the level of annual savings some drivers could make on their car insurance to £319; the potential savings on home insurance could reach £146

“An enormous amount of money is being wasted by people renewing their car or home insurance year after year without searching for a better deal,” added Mr Carter. “This seems crazy when you consider that it’s never been easier to search the market for insurance alternatives online.”

Superficially, it would appear that millions of people are perfectly content with their insurance cover and, in fairness, some will be happy with the levels of service their insurer provides and the price they pay for it. Yet it is difficult to know whether a different insurer could offer an equally professional level of service at a more competitive price if consumers don’t take the time to look. 

Mr Carter agrees: “When we see headline inflation surpassing 10%, reaching its highest level for 40 years, as it did earlier this week, it seems strange that more consumers – and UK consumers are as internet-savvy as any on earth – do not take the time to see if they can save money by checking out alternative insurance providers.

“Granted, there are genuinely loyal customers who knowingly pay a higher insurance premium than had they switched insurers, but the fact is that for millions of consumers, ‘loyalty’ is the result of their apathy which effectively penalises them because they miss out on savings that could run to hundreds of pounds.”

As the spectre of ‘insurance dieting’ rises once more, potentially putting millions of families at risk, logging on to see if you can save a few hundred quid on your annual insurance bill would appear to make enormous sense.

*Recessions combine weakening economic activity with rising unemployment. The UK’s latest unemployment figures are at their lowest level for three decades, while there are more than 1.3 million job vacancies, the highest level on record.

For more financial advice, check out Peter Sharkey’s regular blog, The Week In Numbers.