Finance
Driving Insurance Charges Driver insurance rules have changed for 2022, with a mixed effect for customers. The good news is that price-shopping is no longer the only way to get a better deal. Since 1 January, ‘loyalty penalties’ are no longer allowed in either home or motor insurance. That means an insurer offering a renewal price to an existing customer cannot charge more than they would offer to a new customer with the same details. PRICE WALKING The idea is to stop what the Financial Conduct Authority calls price-walking, in which insurers rely on customers letting policies auto-renew rather than shopping around. It should also remove the pantomime-like process where a customer who has found a better deal elsewhere is suddenly offered a lower price when they try to cancel their renewal. The negative of the rules change is that insurers may well raise prices overall to make back some of the money they can no longer get from the loyalty penalty. That makes it more important than ever to find creative ways to cut costs – though perhaps not as creative as an anonymous social-media user who
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worked as a television camera operator but got a lower premium by describing their occupation as a picture framer! PAY BY MILE Several companies now offer a pay-as-you-go or payby-mile policy. This means that rather than paying a set premium for the year, customers pay a varying amount depending on how much they actually drive. It’s certainly an approach many would have appreciated in 2020, when car use slumped during lockdown. Such policies aren’t quite as simple as they seem. The per-mile rate will still take into account risk factors such as car model and driving experience. There’s also a fixed fee that applies even if you don’t drive at all, designed to cover such risks as your car being stolen. Whether such policies work out cheaper depends on individual circumstances. As a rough rule, they are most likely to suit people driving less than around 6,000-7,000 miles a year. Customers of pay-per-mile policies must fit a device (sometimes dubbed a black box) to their car, which simply measures distance. However, some specialist
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