Why It Still Makes Sense To Shop Around For Insurance In 2022 – Forbes

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The Forbes Advisor editorial team is independent and objective. To help support our reporting work, and to continue our ability to provide this content for free to our readers, we receive payment from the companies that advertise on the Forbes Advisor site. This comes from two main sources.
First, we provide paid placements to advertisers to present their offers. The payments we receive for those placements affects how and where advertisers’ offers appear on the site. This site does not include all companies or products available within the market.
Second, we also include links to advertisers’ offers in some of our articles. These “affiliate links” may generate income for our site when you click on them. The compensation we receive from advertisers does not influence the recommendations or advice our editorial team provides in our articles or otherwise impact any of the editorial content on Forbes Advisor.
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The comparison service on our site is provided by Runpath Regulated Services Limited on a non-advised basis. Forbes Advisor has selected Runpath Regulated Services Limited to compare a wide range of loans in a way designed to be the most helpful to the widest variety of readers.
Published: Dec 25, 2021, 7:00am
The way insurers set their prices for new and existing customers will change from 1 January, but it won’t become any less important to shop around for the best price. 
Here’s how to avoid paying over the odds for cover in 2022.
From 1 January, car and home insurance providers won’t be allowed to charge existing customers more for their renewal than they’d charge a new customer for the equivalent policy.
Insurers have long offered their best prices to new customers as a way to get more people on their books and grow their market shares, but that’s about to change.
In theory, January’s changes should make prices fairer for existing customers, but it’s much more likely prices for new customers will rise to meet renewal levels.
The Financial Conduct Authority (FCA), which has set the new rules, has acknowledged that the change could result in price rises. 
In a report published last September it said: “We expect that our remedy package will probably lead to some consumers paying higher prices if they currently benefit from significant new business discounts as inducements to switch.”
The watchdog noted that customers who didn’t regularly switch insurance providers and paid higher prices effectively subsidised the lower prices enjoyed by regular switchers. Under the new rules, it’s likely that regular switchers are the ones who will lose out.
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Mohammad Khan of professional services firm PricewaterhouseCoopers has predicted that prices could rise by between 5 and 9%. At the end of 2020, the Association of British Insurers (ABI) said the average car insurance premium was £468. If the PwC predictions prove accurate, it would add between £23 and £42 to the average premium.
But just because insurers will bring premiums for new customers into line with their renewal premiums, it doesn’t mean that your existing insurer will be the cheapest – so it’s as important as ever to shop around for cover.
With insurers no longer able to attract new customers with discounted premiums, it may be that they are forced to make their prices more competitive if they want to continue growing their market shares. This could mean there are more savings to be had than ever, making it vital to shop around.
The ABI’s James Dalton said: “While the FCA recognises that these changes could lead to price rises for some who shop around regularly, all customers should get fairer outcomes in the UK’s competitive home and motor insurance markets.”
Despite the changes, two things remain true: first, the policy with the cheapest premiums is not necessarily the best policy for you, and secondly, a price comparison website is the easiest way to save money.
Our car insurance and home insurance comparison services will show you the best prices available for the level of cover you need, and take just a few minutes.
Paying your premium up front rather than in monthly installments will also earn you a saving, since insurers charge interest on what is essentially a loan you take out when you choose to spread the payments.
If you’re unable to or don’t want to pay your premium upfront, there are 0% purchase credit cards that would allow you to spread the cost – but the cards available to you will depend on your circumstances.
Increasing the amount you’re willing to pay in voluntary excess towards the cost of any claim you make can also bring down your premiums. Remember, however, that this is on top of your policy’s compulsory excess, so you should be prepared to pay it if you need to file a claim.
In other words, make sure the total excess is affordable.
It’s possible to save money by taking a less comprehensive type of cover e.g. third party, fire and theft, but you shouldn’t sacrifice adequate protection for the chance to save a few pounds. It could end up being a false economy if you end up needing to make a claim and find yourself under-insured.
Finally, consider which additional features you need and which you could forego to save money. For example, you might not need personal possessions cover on your home contents policy if you’ve already got a mobile phone insurance or gadget insurance policy that offers the same kind of protection.
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Staff writer Mark Hooson has been a journalist within the personal finance, consumer affairs and fraud sectors for more than 10 years. He is also Forbes Advisor UK’s resident tech expert. Mark says he thrives on making ‘complicated and dry topics easier to digest’.

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