Collaborative Post | Consumers are being penalised for their loyalty to insurance companies when their policies are rolled over and they don’t take the opportunity to review and find a better deal.
In these difficult times, strapped by a cost of living crisis, consumers could be saving around £877 per year by not allowing automatic renewals of recurring expenses, including insurance, according to Citizens Advice.
Watch out for the loyalty penalty
Consumers are falling foul of the loyalty penalty, a trap set by insurance and other companies who just roll over your policy for another year, costing ever increasing amounts that easily go unchallenged. It’s the most loyal customers that can end up on the worst deal. It's time to do something about it and save money every year.
For other consumers, it’s all too easy to forget to renew certain insurances and they can find they are uninsured at the critical moment. If only there was a way to get reminded in good time to do something about it.
Linked with the ‘loyalty penalty’, price walking, also known as ‘stepped pricing’ or ‘sliding scale pricing’, is a pricing strategy used by companies to increase the price of a product or service over time, usually on a regular basis.
It’s not just in the insurance business. We’re seeing it emerge from other industries too, like telecoms who now openly state things like “we’ll increase prices every April by 3.9% plus the rate of inflation”. That could mean a 20% increase in prices if inflation is running at 16%. Inflation baked right in and more pain for consumers.
So it pays to know when things are going to renew and to plan to look around for a better deal.
Insurance all over the place
Many of us have multiple kinds of insurance, often with a variety of providers. If you own a car, you’ll certainly have car insurance. But you may also have home insurance for your contents, another policy somewhere for buildings insurance, maybe you’ve got an annual travel policy too. And what about pets? You may well have insurance for your dog or cat. And for many people, health insurance for yourself and the rest of the family.
It’s not always easy to remember which companies provide which insurance for us, let alone being sure when it is that the renewal date for each one comes around. And that’s how they get you - the automatic rollover from one year to the next relies on us being too busy with so many other things in life to notice another letter or email from another insurer.
What can I do?
There are several ways to avoid the loyalty penalty and make sure you’re getting value:
Is there a better, easier way to look out for your insurances?
It's time to Rightly Save
A new service from Champions of Data, Rightly, aims to help consumers get a grip of their insurances so that everyone has a chance to get a better deal. Because there must be a better way to organise all your insurances so you have a chance to always be on the best deal around, and never be a victim of the loyalty penalty.
The new service is called Rightly Save and it helps you never miss an insurance renewal so you can get organised and search for a better deal. It’s automatic, quick, simple and free.
In just a few clicks Rightly Save will help you find all your insurance policies, automatically. Then, you’ll see your list of policies organised all in one place, along with the renewal date for each one and the type of policy, whether it’s for car, home, travel or whichever one it is. And then the service will help you by setting up reminders so you never miss another renewal date and have time to find a better deal before they roll you over.
You can try Rightly Save here.
Disclaimer: this is a collaborative post.
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