You may have heard that the rules have changed so that loyal customers are no longer penalised at renewal. That is true, but it does not mean you can stop shopping around. This guide explains why shopping around still pays, what the loyalty-penalty ban did, and how to get the best deal.
The loyalty penalty and the ban
For years, many insurers quietly raised prices for existing customers each year at renewal, a practice known as price walking, so that loyal customers ended up paying far more than new ones. From the start of 2022, new rules stopped this: insurers must not quote existing home or motor customers a renewal price higher than they would offer an equivalent new customer. The aim was to end the penalty for staying loyal.
What the ban did and did not do
The ban means that, at the same insurer, your renewal price should not be inflated simply because you are an existing customer. What it does not do is make every insurer charge the same, or guarantee that your current insurer is the cheapest. Different insurers still assess risk and price very differently, so another company may offer the same cover for much less. The ban removed one unfairness, but competition between insurers remains.
Why shopping around still pays
Precisely because insurers price so differently, the cheapest deal for you can still be at another company, and you will only find it by comparing. The regulator itself continues to encourage customers to shop around, since the ban tackled price walking at a single insurer, not the wide variation between insurers. So while you are no longer penalised for loyalty in the old way, loyalty can still cost you if a better deal exists elsewhere.
The scale of the old problem
The loyalty penalty was a large problem before the rules changed. The regulator found that, in one year, millions of loyal policyholders would have saved well over a billion pounds between them had they paid the average price for their level of risk rather than a walked-up renewal price. While the ban has addressed the worst of this, the figures show how much shopping around used to matter, and why staying alert still does.
Prices have risen generally
It is worth knowing that insurance prices have risen across the market in recent years, for reasons including higher repair and claims costs. This makes comparing all the more important, since against a backdrop of rising prices, the difference between the best and worst deal can be significant. Shopping around helps you avoid paying more than you need to in a market where prices have generally gone up.
How to shop around effectively
To get the best deal, compare like for like, using the same cover, excess and details across quotes, so you are comparing genuine alternatives rather than different products. Use comparison sites, but also check insurers that are not on them, and consider the cover and service, not just the price, as our guide to how comparison sites make money explains. Starting a few weeks before renewal often gives the best results.
Negotiating and switching
If you find a cheaper quote elsewhere, you can either switch or go back to your current insurer and see whether they will match or beat it. Both can work, and switching is usually straightforward. Do not let a policy simply auto-renew without checking, as our guide to auto-renewal traps explains, since an unchecked renewal is exactly where you can end up paying more than necessary. A little effort each year is well rewarded.
Start before your renewal date
Timing affects the price. Quotes can be cheaper if you arrange cover a few weeks before you need it rather than at the last minute, as insurers sometimes price last-minute buyers as higher risk. So starting your shopping around a couple of weeks before your renewal date, rather than on the day, can itself save money, as well as giving you time to compare properly and to go back to your current insurer if you wish.
New customer deals and introductory prices
Insurers compete hard for new customers, so the best deals are often aimed at them. Although the loyalty-penalty ban stops your existing insurer charging you more than an equivalent new customer, another insurer may still offer a keener new-customer price. This is part of why switching can pay. Just make sure you are comparing the same cover, since a cheap headline price can sometimes reflect less cover or higher excesses.
Watch the incentives
Some deals come with cashback, vouchers or other incentives to switch. These can add value, but judge the underlying price and cover first, since an incentive on a poor-value policy is no bargain. Work out the real cost after any incentive, and check the cover is right, rather than being swayed by the offer alone. A genuinely good deal is one where the cover and price are right, with any extra a bonus.
Loyalty can still cost you
Even with the ban, simply renewing every year without checking can cost you, because your current insurer may not be the cheapest for your risk this year, even if it is not overcharging you for loyalty. The market moves, and the best insurer for you can change. Treating each renewal as a chance to compare, rather than a formality, keeps you from drifting into paying more than you need over time.
When staying put makes sense
Shopping around does not always mean switching. Sometimes your current insurer is competitive, or the difference is small enough that the service, a no claims discount, or the hassle of switching makes staying worthwhile. The point is to make an informed choice each year, comparing and then deciding, rather than either switching blindly or renewing without thought. Shopping around is about knowing your options, not switching for its own sake.
The habit that saves money
The single most valuable habit is to treat every renewal as a prompt to compare, rather than a formality to wave through. A short comparison each year, started before your renewal date and judged on cover as well as price, is what keeps you from drifting into overpaying. The loyalty-penalty ban removed one trap, but the simple discipline of shopping around remains the surest way to keep paying a fair price.
In short
The 2022 rules stopped insurers charging existing home and motor customers more than equivalent new customers, ending the worst of the loyalty penalty. But it did not make all insurers charge the same, so shopping around still pays, because another company may offer the same cover for much less. With prices having risen generally, comparing like for like each year, and not letting policies auto-renew unchecked, remains the way to get good value.
Where to get help and next steps
Read our guides to how comparison sites make money, auto-renewal traps, and paying monthly. This is general information, not financial advice.