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The insurance loyalty penalty: why renewing can cost more

FCA rules now stop insurers charging existing home and motor customers more than new ones for the same policy — but loyalty can still cost you. Here’s how to check.

Last updated 9 July 2026

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For years, insurers quietly raised prices for loyal customers while offering cheap deals to new ones — the “loyalty penalty”. The rules have changed, but staying alert at renewal still pays.

What changed in 2022

The FCA banned price walking: from January 2022, an insurer can’t charge you more to renew a home or motor policy than it would charge a new customer for the same cover.

Good to know. That doesn’t mean your price can’t go up — it means it can’t be inflated just because you’re an existing customer. Underlying costs still change year to year.

Why renewing can still cost you

  1. 1
    Prices still riseClaims trends, your details and the market all move. Last year’s premium isn’t a promise.
  2. 2
    Auto-renewalIf your policy renews automatically, a higher price can go through on the card on file unless you act.
  3. 3
    The market may be cheaperA rival insurer may simply be cheaper for your risk — the new-customer ban doesn’t force every insurer to match each other.

What to do at renewal

  1. ✓
    Read the renewal noticeIt must show last year’s price next to this year’s. Note any increase.
  2. ✓
    Compare like-for-likeGet quotes for the same cover level and excess — not just the headline price.
  3. ✓
    Ask them to matchIf you find cheaper elsewhere, your insurer will often match or beat it to keep you.
  4. ✓
    Check auto-renewalDecide actively rather than letting it roll over unseen.

In short

The FCA killed the worst of the loyalty penalty, but renewing on autopilot can still cost you. Read the renewal notice, compare the same cover elsewhere, and ask your insurer to match — every year.

Frequently asked questions

Didn’t the FCA ban the loyalty penalty?

It banned the worst of it. Since January 2022, insurers can’t charge existing home or motor customers a higher renewal price than they’d offer an equivalent new customer. But prices still rise year to year, and shopping around can still beat your renewal quote.

What is auto-renewal?

Many policies renew automatically unless you opt out, using the card details on file. It’s convenient but means a higher renewal price can go through without you actively agreeing — so check the renewal notice.

Should I just cancel and switch every year?

Comparing every year is sensible, but weigh up cover quality and excess, not just price. Sometimes staying — after asking your insurer to match a cheaper quote — is the best outcome.

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Sources & last checked

Last checked against official sources: 9 July 2026.