Martin Lewis has advised viewers to never renew their car insurance automatically – and revealed the precise date to take out insurance instead.
The British money saving expert, 51, discussed insurance in tonight’s episode of The Martin Lewis Money Show Live on ITV.
Martin said that car insurance costs are up ‘a shed load’ – 61 per cent in the past year – while renewal costs have increased by 30 per cent.
He strongly recommended viewers avoid automatic renewals and instead actively explore different options – ideally 23 days earlier as it can halve the cost of your policy.
The presenter explained: ‘Now we have run 80 million quotes and I’ve updated this a few times over the years to see exactly how the price is changed.
‘It starts to drop at around 30 days, you get into the sweet spot around three to four weeks before your renewal date and it bottoms out at exactly 23 days. This is on average.
‘After this, the price starts to rise and rise and rise and rise so for someone who here is paying around £700, if they get their insurance on the day of renewal and get a quote elsewhere, they will be paying around £1,200.
‘So what everybody needs to do is get in your diary that 23 days before renewal, because that’s the actual sweet spot.’
On the other hand, obtaining quotes for home insurance 21 days before renewal is likely to save you the most amount of money.
Martin explained how risk charts show those who leave it to the last minute are a higher risk.
The presenter also highlighted the importance of checking at least two comparison sites as they will offer different prices for the same insurers and brokers.
Additionally, some may benefit from legitimately tweaking their job title since different occupations come with varying risks.
Martin joked: ‘If you’re an astronaut, insurance skyrockets!’ before clarifying: ‘As long as it’s a reasonable job title, for example, illustrator not artist, that can alter the price too.’
While sharing further tips for cutting costs, he suggested adding a second ‘responsible older driver’ to the policy.
He clarified to viewers that car insurance costs are determined by the ‘actuarial risk’. For newer, younger drivers, it might be possible to reduce insurance expenses by including a second driver on the policy.
‘This averages out the risk and brings the price down. Perversely, adding a second driver can reduce the cost of your car insurance,’ the presenter explained.
However, Martin cautioned that the second driver cannot be listed as the primary driver as this would be considered ‘fronting’ – a criminal offense that renders the insurance invalid.
Earlier today, Martin explained to people that they shouldn’t get too hung up on their credit rating – and revealed what is really important when they are looking to get a loan.
The money saving expert appeared on This Morning today to answer viewer’s financial questions.
One caller phoned the programme to ask how to improve her credit score, revealing that while she has a high score, she keeps getting refused credit after getting an increase in her overdraft.
She also noted that she was ‘refused a mortgage when [she] was renewing it this year due to being made redundant whilst on maternity leave’.
She then asked: ‘I’ve never had a bad credit rating before I always pay off everything in full. What can I do to improve it?’
Martin’s answer may come as a surprise to some, as he responded to the question initially by saying: ‘We just have to get away from being hung up too much about credit scores.’
He explained: ‘You do not have a credit score in the UK. The one that you’re given by the credit reference agencies is just their indication of a loose guide to what a typical company might look at, if it was only looking at your credit history.’
Martin continued to explain what the ‘single most important factor’ is when you are being looked at for any form of credit – your income.
He continued: ‘If you had no income and a perfect credit score, and you wanted a loan, you’re almost certainly not going to get it because you can’t pay it back.
‘So when you tell me you’ve been rejected, what you haven’t told me, is the crucial factor. You talked about being made redundant.
‘Well, if you’ve been made redundant and you don’t have a job, and you don’t have income even with a great credit score, it is going to make getting credit much more difficult.’
This, he explained, could be why she is being rejected. There are three different agencies which have your credit reference files. Martin told the caller to get her files from all three of the agencies.
He added: ‘Download them, go through line-by-line just to check there are no errors – such as you’ve moved house and you’ve got accounts that are still listed at your old address’.
These include things like that could ‘get you knocked down due to fraud scoring’ for example. He said go through all of that.
Martin concluded: ‘But remember, credit scoring is only one half of this. The other half is affordability scoring, which is far more about your income.’
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
