MILLIONS of households could see their car and home insurance bills rise under a rules shake-up rolling out in two weeks.
In the new year, insurers will not be allowed to charge existing customers who are renewing their policy more than new customers' deals under the rule change.
Industry watchdog the Financial Conduct Authority announced the shake-up in May this year, which aims to tackle the "loyalty" penalty which sees firms offer better deals to new customers.
This penalty sees existing customers pay more for their deal as a result.
The new rules will come into force from January 1 2022 – and the FCA estimates Brits could save £4.2billion over 10 years because of the changes.
While it will be good news for old customers who get their policies automatically renewed, some experts have warned it could hit new customers shopping around for a better deal.
When hunting for a better policy, new customers will be given the same quote as they would give to old customers who have renewed theirs.
But Hargreaves Lansdown senior personal finance analyst Sarah Coles said: "It’s good news for those who stick with one provider, but it’s likely to mean the end of very cheap deals for those who are prepared to keep switching."
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She added that the rule shake-up, however, will prevent insurers from raising prices every year after tempting you in with a bargain deal.
There are no prizes for loyalty when it comes to insurance.
You can end up paying hundreds of pounds more for your home and car insurance if you let your policy auto-renew with your existing provider.
Research by comparison website Compare The Market has found that people risk paying more than £450 when stuck in the insurer loyalty trap.
However, it found that new customers who have switched providers pay on average £262 less for motor insurance and £113 less for home insurance than those who stay put – a total saving of £456.
How to avoid paying more
To make sure you're getting the best deal possible on your insurance policies, you'll want to follow our four tips below to help you.
Switch at the right time
There's a trick to getting the best policies – and often, it's all about timing.
You won't want to wait until your renewal date to shop around for a better rate as you could be paying hundreds of pounds ore.
Your insurer will usually send you a letter three to four weeks before your policy ends to offer you a new price.
At this point, you'll want to look around, compare prices and switch if there's something better – don't leave it until the last minute.
Research by comparison website Compare The Market suggests insurance policies are £319 cheaper if you switch three weeks before your renewal date compared with switching on the day a policy ends.
Tweak your job title
Simply changing the wording of your job title can have a big impact on price.
This is because insurers see certain professions as riskier than others – which means they'll more likely have to pay out on claims.
GoCompare analysis found that a chef was quoted £659.63 for car insurance while a kitchen worker was quoted just £520.10 – a difference of nearly £140.
However, it's important that you don't lie about your job – it could invalidate your policy.
Shopping around for building and contents insurance for your home could save you £113 annually, according to Compare The Market.
To compare home insurance, you will need information such as your address, property value, security features you have installed, how much your possessions are worth and previous claims history.
Drivers will need to provide vehicle details, where your car is kept as well as your age, profession, driving history and track record when comparing deals.
You could save up to £262 by shopping around for car insurance, Compare The Market claims.
Haggling for a deal
If you've found a cheaper deal, it's worth phoning your current insurer to see if they can beat the offer and keep you on as a customer.
If your insurer cannot offer you are better deal, then you might want to consider switching to someone else.
It could mean that you can stick with your insurer without the hassle of switching – and save cash too.
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