Car Insurance Renewal Letter Explained UK 2026

Last reviewed: 26 April 2026

What the FCA requires renewal letters to contain

The FCA's General Insurance Pricing Practices rules (PS21/5), effective January 2022, substantially changed the required content of motor insurance renewal letters. The key change: renewal letters must now display the amount charged in the previous year's premium alongside the new renewal premium, in a prominent, easily comparable format.

This dual-premium display enables consumers to immediately see whether their renewal premium has increased, decreased, or remained stable relative to the previous year. Where the renewal premium has increased above the equivalent new-customer price for the same risk, the insurer is in breach of the price walking prohibition, the FCA's rules require that renewing customers are not charged more than equivalent new customers at the same risk.

The FCA also requires renewal letters to include a prompt encouraging consumers to check whether they could obtain a better price elsewhere, a market-searching encouragement that was not present in pre-2022 renewal letters. This prompt must be present regardless of whether the renewal price has increased or decreased.

Key fields in the renewal letter

Policy reference number: The unique identifier for your specific policy. Required for any contact with the insurer about the renewal.

Renewal date and time: The precise date and time at which the current policy expires and the renewal policy begins. This is critical, if you are switching insurer, the new policy must start at exactly this date and time.

Insurer name and FCA Firm Reference Number (FRN): The insurer providing the renewal cover and their FCA regulatory identifier. Verify the FRN at register.fca.org.uk to confirm the insurer's current authorisation.

Previous year's premium and new renewal premium: Both displayed prominently in accordance with FCA PS21/5. Compare these directly to establish the year-on-year change.

NCD years confirmed: The number of NCD years at renewal. Verify this matches your expectation, any claims or adjustments during the year should have been reflected in the NCD position shown.

Declared mileage, use class, and overnight parking: The underwriting factors declared at the previous inception. Confirm all are still accurate before accepting the renewal.

Named drivers listed: All named drivers currently on the policy. Verify the list is accurate, any named drivers who should be removed (because they no longer use the vehicle) or added should be updated before renewal.

Auto-renewal status and opt-out instructions: Whether the policy is set to auto-renew and how to opt out. FCA rules require this information to be clear and the opt-out process to be straightforward.

Reading between the lines on premium changes

Where the renewal premium is higher than the previous year's premium, the change may reflect: a genuine change in the policyholder's risk profile (a claim during the year, an NCD step-back, a policy change mid-term); an increase in the insurer's overall pricing for the risk category (reflecting claims inflation, regulatory costs, or market conditions); or a miscalculation. Where the change appears larger than expected, contact the insurer for a written breakdown of the factors contributing to the premium change.

Under FCA PS21/5, the renewal premium cannot exceed what the insurer would charge a new customer with the same risk profile. If the renewal premium substantially exceeds the open market price for equivalent cover, which can be verified by running a market comparison, the insurer should be asked to match the market price before the renewal is confirmed.

Auto-renewal: the opt-out process

Most UK motor insurance policies auto-renew by default, the policy continues for another year and the payment method on record is charged without requiring the policyholder to take any positive action. Auto-renewal protects against accidental lapses in cover.

The FCA requires renewal letters to make auto-renewal status clear and the opt-out process straightforward. Where auto-renewal is active and you wish to switch insurer or not renew, contact the insurer at least seven days before the renewal date to cancel the auto-renewal. Opt-out confirmation should be obtained in writing from the insurer.

Key Figures

Using the renewal letter to negotiate with the current insurer

The renewal letter is a starting point for negotiation with the current insurer, not a fixed final offer. Where the open market comparison returns lower prices for equivalent cover, the current insurer can be contacted to request a price match.

To negotiate effectively: obtain at least two or three open market quotes on equivalent terms; contact the current insurer's retention team (not the standard customer service line) with the competing quotes; and request a match or improvement. Many UK motor insurers' retention teams have pricing authority to reduce the renewal premium to retain the customer without the policyholder needing to switch.

Where the current insurer matches the market price, renewing with the current insurer preserves continuity, no new CIDRA 2012 declaration process, no new inception, and no NCD certificate transfer. Where the insurer cannot match the market, switching at renewal is the financially rational outcome. BIBA-registered specialist brokers (biba.org.uk/find-insurance/) can benchmark the renewal letter premium against the broader market, including underwriters not available on aggregator panels, in a single comparison exercise.

Common renewal letter errors and how to challenge them

The FCA's Consumer Duty obligations (effective July 2023) require insurers to treat renewal letters as opportunities to ensure consumers have accurate, fair-value products. Despite this, renewal letters sometimes contain errors that disadvantage the policyholder.

Common renewal letter errors: incorrect NCD years (not reflecting the correct accumulation following a clean year); incorrect declared mileage (reverting to a previous year's figure rather than the updated declaration); named drivers listed who should have been removed; or a premium increase that is not explained by any change in the risk profile or market conditions.

Where any renewal letter detail appears incorrect, contact the insurer before the renewal date to request a correction. Under FCA ICOBS, the insurer must correct material errors and re-issue the renewal on corrected terms. Where the insurer refuses to correct a clear error, submit a formal complaint and, if unresolved within eight weeks, escalate to the Financial Ombudsman Service at financial-ombudsman.org.uk.

Frequently Asked Questions

What information must a car insurance renewal letter include?

Under FCA PS21/5 (January 2022): last year's premium and new renewal premium side by side; a market comparison prompt; auto-renewal status and opt-out instructions; confirmed policy details (NCD years, declared mileage, use class, named drivers); renewal date; and the insurer's FCA FRN.

Why are two premiums shown on my renewal letter?

The FCA's General Insurance Pricing Practices rules (PS21/5, 2022) require renewal letters to display both the previous year's premium and the new renewal premium to enable year-on-year comparison and to enforce the price walking prohibition.

Can the renewal premium exceed what a new customer would pay?

Under FCA PS21/5, no. Renewal premiums must not exceed the equivalent new-customer price for the same risk profile. If your renewal is materially above market comparison prices for equivalent cover, ask the insurer to match the market price.

How do I opt out of auto-renewal?

Contact the insurer at least seven days before the renewal date by telephone or through the online portal to confirm cancellation of the auto-renewal. Request written confirmation of the opt-out.

What should I check on the renewal letter before accepting?

Confirm that all declared details are still accurate: annual mileage, use class, overnight parking, named drivers, and vehicle specification. Any changes during the year that were not notified mid-term should be updated at renewal under CIDRA 2012.

Sources & Verification

• FCA, General Insurance Pricing Practices (PS21/5): https://www.fca.org.uk/publications/policy-statements/ps21-5-general-insurance-pricing-practices
• ABI Motor Insurance data: https://www.abi.org.uk
• Road Traffic Act 1988, section 143: https://www.legislation.gov.uk/ukpga/1988/52
• Consumer Insurance (Disclosure and Representations) Act 2012: https://www.legislation.gov.uk/ukpga/2012/6
• HMRC Insurance Premium Tax: https://www.gov.uk/guidance/insurance-premium-tax
• BIBA, Find a specialist broker: https://www.biba.org.uk/find-insurance/
• gov.uk, Driving without insurance: https://www.gov.uk/vehicle-insurance/penalty-for-driving-without-insurance

This article is for informational purposes only and does not constitute financial advice. Always verify rates with official sources before making any financial decision.