Insurance auto renewals: why those comparison site freebies could cost you

The increasing trend for 'free' perks and extras could end up costing you £100s in the long run.

Everybody likes to get something for nothing.

Whether it’s collecting stamps at the coffee shop so that you get a free hot drink (when they eventually reopen obviously), shopping online through a cashback site so you get a bit of money back, or any other giveaway, if it’s free it’s bound to appeal to someone.

Comparison sites are no different, throwing in certain freebies when you use them to take out some form of financial product.

The trouble is that these giveaways can come with a costly sting in the tail if you aren't paying attention.

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I didn’t ask for that

The exact freebie on offer will vary depending on what product it is you’re buying.

If you’re going for an energy deal for example, then the comparison site may throw in free boiler cover as a sweetener, while if you’re taking out a mobile phone deal then you might get a subscription to a streaming service like Spotify as a bonus.

The trouble is that while you might not ask for these freebies at the outset, there may still be a price to pay down the line.

Free trials rather than freebies

Really, they're more like free trials because they're usually only free for a certain period. 

That free boiler cover only lasts for a yea,r after all, so 11 months from taking out that new energy deal you may end up receiving a letter informing you that you’ll be charged money ‒ likely in excess of £100 ‒ to keep the cover. 

Worse still, some of these policies may be on an auto-renew basis, meaning you have to formally tell them that you don’t want the cover to continue.

As the notice of the free trial ending can often coincide with the actual policy or deal you took out expiring, there's a chance you'll mistake price hike email or letter as confirmation of just that.

So if you don’t open that notification letter or at least don’t read it properly, you may end up coughing up hundreds of pounds for a ‘freebie’ you didn’t even want in the first place.

Far from being a nice little added bonus, it ends up being a costly, unwanted extra.

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Picking the deal for the right reason

In truth, all freebies and added bonuses should be viewed with suspicion.

All too often it’s easy to talk yourself into signing up for a less competitive deal, precisely because there is some sort of giveaway attached to it.

Mortgages are a good example here, with lenders in the past coming up with all sorts of added extras they can entice borrowers with.

In recent years, this has tended to be good, old fashioned cash, but in the past have ranged from paying off your Council Tax for a year to electrical goods like iPads and computers.

But when it comes to a home loan, it’s vital that you do the sums and find the right product for your circumstances based on the actual repayments and how comfortable you are with them. I

f that deal also happens to include some sort of giveaway on top, then great, but it shouldn’t be a fundamental factor in your decision-making process.

It’s a similar story with broadband.

Goodness knows we are all more reliant than ever on the internet service we can get in our homes, but even before we were in lockdown it was important to identify a provider who could deliver the speeds and consistency of service you need, at a price you’re happy with.

It may be that they chuck in 12 months of Now TV or an Amazon Echo on top, but that should never be the deciding factor when electing which deal to sign up for.

Sometimes the freebie isn’t particularly related to the actual product either. CompareTheMarket, for example, offers customers two-for-one cinema tickets on Tuesdays and Wednesdays for a year.

It’s a deal that I like and have made use of in the past, but it’s one that should be weighed up carefully at the outset.

Chances are there’s little point signing up for an insurance deal, for example, through the site that’s more costly than you could get elsewhere, just so that you might save a few quid on the odd trip to the movies.

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The best things in life are free… for now

Let’s say that you find the perfect deal for you and you get some cracking freebies thrown into the bargain as well.

Result!

But it’s vital that you take the time to read the terms and conditions of those freebies carefully. Exactly what is included? And for how long?

If you’ve been handed free boiler cover for example, it may be that the policy simply ends 12 months later so you don’t need to do anything, unless you really like that cover and want to keep it going of course.

But if it auto-renews, then be sure to make a note in your calendar to remind you to cancel it in good time ‒ and how.

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