The laws on car and home insurance were changed in 2022 to protect consumers but Martin says “loopholes” remain that people have to get around
Martin Lewis has issued a warning to Brits over “loopholes in the law” on car and home insurance. The money-saving expert raised the alarm while speaking to a woman who managed to save £589 by following his guidance.
Regulations introduced by the Financial Conduct Authority in 2022 say that renewal quotes for home and motor insurance customers should not be more expensive than those offered to new customers. The FCA says the rules mean “insurers will be required to offer renewing customers a price that is no higher than they would pay as a new customer.”
However, Mr Lewis says there are “loopholes in the law”. He outlined them while discussing how one woman managed to cut hundreds of pounds from her bill.
Kath from Liverpool told Martin on a recent episode of the Martin Lewis Podcast that she had shaved £589 off her car insurance after following his recommendation to search for new quotes 23 days before renewal. She said she “couldn’t actually believe” how much more affordable other quotes were at that point.
And she got the substantially cheaper quote – £637 rather than the original quotation of £1,226 – from an insurer that forms part of the same parent company. This prompted Martin to explain that there were “loopholes” that people needed to understand when arranging car and home insurance, reports the Mirror.
He said: “You may have heard that they got rid of the idea that existing customers could be charged more than new customers. But the law on that is very specific.
“Existing customers can’t be charged more than new customers going via the same channel. It’s channel specific. So what that means is if you went by one comparison site then the next year a new customer going via that comparison site could not be given a cheaper price than you in exactly the same situation on the same comparison site.
“But they could be charged less on a different comparison site, or going direct, or going through a different route. So there are a lot of loopholes in that law.”
Kath’s decided to consult comparison websites for alternative quotes after haggling with her insurer only reduced the quote by £100. She said: “I couldn’t actually believe how low. I thought there must be a catch here. This can’t be right.”
This occurred with 22 days remaining before her renewal date. Martin — well-known to ITV viewers for the Martin Lewis Money Show and to BBC listeners for his Martin Lewis Podcast on Radio 5 — refers to this window as “the sweet spot”.
New regulations governing car insurance came into force on 1 January 2022. When the changes were announced, Sheldon Mills, Executive Director, Consumers and Competition at the FCA, said: “These measures will put an end to the very high prices paid by many loyal customers. Consumers can still benefit from shopping around or negotiating with their current provider – but won’t be charged more at renewal just for being an existing customer.”
However, Martin argues that these “loopholes” mean consumers should always shop around for alternative quotes before renewing their policy. To listen to the full Martin Lewis Podcast episode, go here.
