“Loyalty Penalty” To Be Stopped In January 2022

Many motorists will probably be pleased to read that, from 1st January 2022, the Financial Conduct Authority (FCA) has stopped car insurance providers here in the UK from charging their existing customers more for their motor insurance than new customers when their policy comes up for renewal.

At the present time, if you take out car insurance with an insurer for the first time then it is quite possible that you will get a good deal as far as how much your premium will be. However, when your policy is due to be renewed, it is quite possible that you will end up paying more for your cover than a new customer will.

This is going to change at the start of next year as insurers will have to charge an existing customer no more than a new one who take out cover through the same sales channel. For instance, if you renew your cover online then you cannot be charged more than a new customer arranging cover online. However, if you are an existing customer who arranged cover in this way then your premium may be more than a new or existing customer who took out a policy over the phone.

Obviously, until these new rules come into force, policyholders should ideally shop around to try to get a better deal and even when they do come into force it may be worth checking with other insurers how much they would charge and compare it with how much your existing insurer intends to charge at renewal.

A potential downside of this new rule is that it is expected that insurance providers will stop offering new customers significantly lower premiums. This may impact on motorists who shop around each year for a cheaper deal.

You may be interested to read that the FCA is forecasting a significant saving for motorists in the long term as a result of this new ruling concerning car insurance.

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