Motor Insurance

Car insurance renewal warning as family 'ripped off' with breakdown renewal £600 more than new deal

A father has shown the importance of drivers checking their insurance renewal dates after he was charged £747 by the AA for breakdown cover on sale to new customers for nearly £600 less.

The driver said he feels "ripped off" after discovering the money had been taken from his account without realising he'd signed up for auto-renewal.

The self-employed construction consultant had signed up for a family breakdown cover which gave breakdown assistance to him, his wife and daughter in whatever car they were driving.

Last year he paid £575 for the same policy, so the £747 bill was a 30% increase.

And it emerged the AA was offering a basic deal to new customers for £170. The cover was on offer with a 50% discount for the first year, before going up to £340. Even this full price was less than half what the customer, featured in the Guardian, was charged.

The AA told us the deal was not “like for like” when compared to the man’s policy.

Since 2022 it's been illegal for insurers to charge existing home and car insurance customers higher fees than new customers. However, car breakdown firms are not included in the rules, which were put in place by the Financial Conduct Authority.

The story demonstrates the importance of checking renewal dates and comparing prices before your insurance expires. Insurance policy quotes can also increase in the few days before a policy ends, compared to prices offered a few weeks earlier.

The average comprehensive car insurance cost was £511 between April and June 2023 - up 22% from £419 in the previous year, according to the Association of British Insurers.

Erin Yurday, CEO and co-founder of NimbleFins, said: "This case is a word of warning to anyone with an insurance policy.

"Although car and home insurance providers are not allowed to charge repeat customers more than new customers for the same deal, car insurance prices do still fluctuate from company to company. This is especially the case at the moment with inflation disrupting the market.

"The price of car insurance is rising quite a bit due to the increase in the value of second hand cars and rising labour, repair and courtesy car costs. As a result of this and your current provider's recent claims experiences (e.g. thefts of certain makes and models of car), they might decide they aren't as keen to insure your car next year, passing through a significant price rise to you upon renewal.

"It means it's especially important to compare car insurance prices in the run up to your renewal date to ensure you're still getting the best deal. It’s best to do this a few weeks in advance, rather than leaving it to the last minute when prices might be significantly more expensive.”

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The father in the Guardian article was unable to get a refund for his breakdown cover as he missed the 14 day cooling off period, with emails about autorenewals going to his junk folder.

The AA customer of 20 years said: "To say I feel ripped off is a huge understatement. I certainly won’t be renewing next year.”

The AA said his cover was more expensive than the basic deal it was promoting because he had increased his level of cover the previous year, added a family member, made callouts and had added extra features such as lost key insurance, therefore it was “not comparing like with like”.

A spokesperson for the AA said it always contacts its members well in advance to inform them of the previous and new price.

They added: “We are sorry that our member is not happy with his breakdown cover renewal quote.

“There are a number of factors that determine a renewal quote which include any changes made to the policy mid-term, risk rates and inflationary costs. In this case, our member had upgraded his policy by adding a family member to his joint policy after the start date. As the family member had been added after the policy had started, their inclusion would automatically be factored into the renewal quote.

“Given that the policy was already providing comprehensive benefits, when adding the additional member, the member would have been advised of the impact of increasing the risk and given the option of reviewing the products included in their package.”

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Helen Barnett

Helen is a journalist, editor and copywriter with 15 years' experience writing across print and digital publications. She previously edited the Daily Express website and has won awards as a reporter. Read more here.


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