Santander: cut your car insurance renewal by 20%

Santander has introduced hefty cuts to its car insurance renewal quotes, so long as you have certain other Santander products.

Santander is offering 10% or 20% off your car insurance renewal quote, depending on which Santander products you already hold. This adds to the bank's existing range of devices that encourage more loyalty.

If you have a Santander 123 current account or credit card, you'll get 20% off your renewal quote with another car insurer. All other Santander customers get 10% off.

Existing Santander car insurance customers aren't allowed the deal, demonstrating that Santander might encourage loyalty, but it doesn't necessarily have your best interests at heart once it has got it.

Who can get this deal?

As always, there are other terms and conditions, but the scheme is not as exclusive as you might expect:

• You must be between 23 and 75 years of age.
• All named drivers can't have more than one fault claim.
• All named drivers can't have more than one minor motoring conviction in the past three years.
• All named drivers must have held a full driving licence for at least three years.
• You must have at least one year's no claims bonus.

In addition, you'll have to fulfil their usual acceptance criteria, although speaking as a former insurance consultant, among several other insurance roles, I would expect the majority of people would pass. If not, I'd think something strange was going on.

The minimum premium is £225 for comprehensive and £195 for third party, fire and theft, but there aren't many people who can get policies that cheap anyway.

It's only available by calling Santander directly (although you're really calling Equity Direct Broking Ltd, which runs Santander's car insurance service).

Will you save money?

The short answer is, you won't know until you've got your renewal quote and compared prices elsewhere first.

On average, a car insurance customer might save 18% on the renewal price by shopping around, according to Which? research.

This means that, if you're entitled to just a 10% discount, you're not likely to do well with Santander.

If you can get the 20% discount though, on average, you might save a few extra pounds with Santander. However, many people aren't “average”. Lots of customers who renew rather than shop around end up paying at least 30% over the odds.

On the other side of the coin, some people save less when they shop around, meaning it's well worth calling up Santander if you can't get much money off when comparing the market.

What's in it for Santander?

While Santander will end up accepting some customers at much lower prices than it should, most customers could probably get cheaper policies elsewhere. So it will get more than its fair share of car-insurance customers for the price, while increasing loyalty at the same time.

In addition, it will surely use the two normal insurance tricks to make money in future: it will bump up your premiums later and – even more sly – it will not lower them for existing customers at times when the rest of the market is doing so for new customers.

More loyalty for Santander

The bank always has a few offers on the go to encourage existing customers to buy more financial products from it.

Existing current account or credit card customers can get access to an exclusive cash ISA deal that fixes your interest for two years, paying 3.3%. Cash ISAs are savings accounts that you don't need to pay tax on, unlike normal savings accounts.

This deal is about as good as it gets for two-year cash ISAs, although you'd need a specific reason to lock your money up for that amount of time. If you're not saving for something in two years, you're likely to be better off sacrificing a tiny bit of interest and keeping your money flexible in an easy-access cash ISA.

Existing current account or credit card customers can also get an extra 10% off their Santander home insurance (which is arranged and administered by BISL Ltd).

Remember, though, that financial companies shouting loudest about discounts frequently aren't as cheap as others that offer no discounts. It's the final price that's important, rather than how much the insurer or broker says it's cutting its own throat for you.

More on car insurance:

Compare car insurance quotes

Car insurers are cheating older drivers

OFT refers motor insurance industry to Competition Commission

Multi v single car insurance – what’s cheapest?

Essential car insurance features

How to pay for your car insurance

25 ways to cut your car insurance