Home Insurance: Auto-Renew Or Re-Shop?

Many home insurance policies automatically renew for another 12 months unless the customer specifically states that they do not want the policy to continue. Insurers are required to notify customers that their original policy is coming to an end, and provide details of the new policy and premiums. However, automatic renewal often results in increased premiums, and insurers rely on customers not bothering to switch providers. Therefore, it is usually more expensive to stay with the same insurance provider.

Home insurance policies often have an auto-renewal clause

While auto-renewal is convenient for those who don't want to go through the hassle of renewing their policy, it can often lead to higher premiums. Insurance companies rely on people being too lazy to switch providers, so they charge returning customers more than new customers. Premiums can increase quite drastically with automatic renewal, and insurers are required to clearly state this in their communication with the customer.

If your policy has automatically renewed and you wish to cancel it, you have a 14-day "cooling-off" period during which you can cancel your policy for a minimal or no fee. After this period, you will likely have to pay a hefty cancellation fee.

To avoid automatic renewal, you must contact your insurance company and inform them that you do not wish to renew your policy with them. It is a good idea to start looking for alternative policies towards the end of your current policy, so you can ensure that your home and belongings remain protected. You can compare quotes online to see if you could be getting a better deal elsewhere.

Insurers must notify customers of auto-renewal

Many home insurance policies have an auto-renewal clause. This means that your home insurance will renew for another 12 months without you having to do anything, unless you specifically state that you don't want it to continue.

If your insurance has automatically renewed and you want to cancel it, you have 14 days to do so without penalty. This is called the 'cooling-off' period. After this, you will likely have to pay a cancellation fee.

If you are charged a cancellation fee and the insurer won't refund it, you can complain to them by letter or email. If they still don't refund your money, you can take your complaint to the Financial Ombudsman Service, who will act as a mediator.

Customers can cancel auto-renewed insurance within 14 days

Many home insurance policies automatically renew for another 12 months unless the customer specifically states otherwise. If your policy has auto-renewed, you can cancel it within 14 days of the renewal date, which is known as the 'cooling-off' period. During this time, you can cancel without penalty and receive a full or almost-full refund of your premiums. You may, however, be charged for the number of days you were covered, as well as an administration fee.

To cancel your policy, you must inform your insurer as soon as possible. You can usually do this by phone or email, and they will inform you of any cancellation fees. It is important to note that cancelling the direct debit for your insurance with your bank does not cancel the policy. If you cancel the direct debit without informing your insurance company, the policy will remain active, and they may chase you for payments.

If you cancel your policy after the 14-day cooling-off period, you will likely face higher cancellation charges. Most insurers will give you a pro-rata refund, provided you haven't made any claims. Administration or cancellation fees typically range from £35 to £50, but you should check your policy documents for specific details. If you had a discount when you bought the policy, the insurer will likely deduct this amount from your refund.

If you feel that the cancellation charges are unfairly high or that you have to cancel due to a mistake on the insurer's part, you can complain to the company. You can write to their customer service department, detailing what happened, when, and why you believe the charges are unfair. If you are still unsatisfied, you can escalate your complaint to the Ombudsman, who will act as a mediator between you and the insurer.

Auto-renewal was initially designed to retain customers

Insurers often charge a cancellation fee, but this can be avoided if the customer wasn't informed about the auto-renewal clause. Customers can also cancel their policy within 14 days of it renewing, which is known as the 'cooling-off' period. After this period, insurers may charge a hefty cancellation fee.

Auto-renewal can lead to higher premiums for customers. For example, a customer of Tesco Bank experienced a renewal quote that was over 1,000% more than his previous premium. In such cases, customers can look for cheaper cover elsewhere or negotiate with their current insurer to match the best quote they find as a new customer.

Auto-renewal is not limited to home insurance

In addition to auto insurance, other types of insurance that may offer auto-renewal include health insurance, life insurance, and business insurance. It's important to note that the specific terms and conditions of auto-renewal can vary depending on the type of insurance and the insurance provider.

While auto-renewal can be convenient, it's always a good idea to review your insurance policies periodically to ensure they still meet your needs and to compare rates with other providers. By reviewing your policies and shopping around, you may be able to find better coverage or more affordable rates.

Additionally, keep in mind that insurance companies may choose not to renew your policy under certain circumstances. For example, if you fail to pay your premiums, commit fraud, or file too many claims, your insurer may decide not to renew your policy. Therefore, it's important to stay informed about the terms and conditions of your insurance policy and to maintain a good relationship with your insurance provider.

Frequently asked questions