The sneaky car insurance hikes that cost drivers £2BILLION Insurers rely on loyalty to make a fortune from customers Auto-renewal means drivers spend extra £1.83bn on bigger premiums Premiums have been falling - but renewal costs can be much higher Every year, drivers spend an extra £2billion on car insurance simply by accepting the premium offered to them by their current insurer. Often this happens because customers don't realise that their annual policy has been hiked from one year to the next. They think that because they got a good deal 12 months ago - and nothing has changed since - their insurer will reward them as loyal customers the following year. Insurance rage: The Gutteridge family were left reeling by a big increase in their car cover from Admiral But, often, nothing could be further from the truth. Rather, insurers will rely on this false sense of loyalty to make a fortune from good customers. Today, Money Mail calls for this to end by asking insurers to start telling customers what they currently pay for car cover when they offer a quote for the following year. This simple figure would help customers decide whether they should stay with their current insurer. And it would force firms to be honest about the mark-ups they are passing on to existing customers. Each year, three in every ten drivers blindly agree to renew their insurance with the same company. Our investigation lifts the lid on automatic renewals, and why you should never accept your insurer's first offer. The Gutteridge family were flabbergasted when their annual premium to insure their Citroen family car leapt from £260 to £460 with Admiral - a 76 per cent rise. Mark, 41, who works in IT in Bristol, says: "To say we were angry is an understatement. It was a huge hike, despite there being absolutely no changes in our circumstances at all. The worst part was that the same thing happened last year with Admiral. At that point, we phoned to cancel and they offered to match the best price, so we renewed. But we were so fed up that this had happened again, and that once again we'd have to phone them to get a better deal, that this time we cancelled straight away. "It was the repeated use of this "tactic" that forced us to switch." The couple (pictured above with daughter Amy, six, and three-year-old twins Rhys and Jess) ended up insuring their car with rival Privilege for less than the paid last year - £240. In 2011, a law was introduced that saw most insurers automatically renew your cover unless you cancelled it. This was to ensure that no driver accidentally had insurance that ran out and then got behind the wheel. Graeme Trudgill, of the British Insurance Brokers" Association, says: "Auto-renewal is a safety net which ensures drivers don't fall between policies." Up to 35 days before your cover expires, your insurer will write to you and tell you what it will charge you for another 12 months. It's what happens next that lies at the heart of the auto-renewal rip-off. You can shop around for the best deal - but, if you do nothing and don't contact your insurer, then you'll be covered again without lifting a finger. Research by price comparison website GoCompare suggested 8.2 million drivers auto-renewed their car cover during the previous 12 months. That works out as nearly one in three of the 28.4 million drivers on the roads, figures from the Department of Transport show. The fear is that many of these motorists will not realise how much their renewal quote has been increased by. Using GoCompare's own industry estimates, drivers save £222 on average when they shop around. So those who don't are needlessly spending an extra £1.83 billion on bigger annual premiums. Costly: Drivers are finding their insurance premiums are going up The average comprehensive car insurance now costs £536, figures from the Association of British Insurers (ABI) show. The good news - you might be surprised to hear - is that for the past two years, average car insurance premiums have been falling. According to AA Motoring, trade body the ABI and accountants Towers Watson, they have dropped by between 11 per cent and 14 per cent over the past 12 months alone. But, while there may be substantial savings for those who shop around, for those who stay put, it appears as if premiums are rising. We asked a number of insurers to provide information about changes in premiums paid by existing customers - but none would give us this information. If you're one of the handful of people who do keep a record of what they pay from one year to the next, ask yourself this: when has the new quote you've been sent ever gone down? Mary Jenkins, 65, from Leicester, was recently quoted £350 to insure her Peugeot 306 - up from £200 the year before. "I was stunned," she says. It was such a huge rise that I cancelled it immediately, without even shopping around. I knew I could find a cheaper policy somewhere, and just wanted to get rid of it as quickly as possible. Insurers say the prices of auto-renewal policies are not hiked willy-nilly. Rather, one month before your policy is up, software that is run by the insurers begins to crunch numbers about you and your policy. First, it checks where insurance prices have been heading nationwide. Then, it assesses your policy against what's known as its insurance book - the value and risk of having to pay out on claims of all its policies. If it thinks you've become a lot riskier, then it'll push up the premium - even if you've done nothing wrong. An industry source says common reasons for a higher premium include a spike in car theft in your postcode, or the arrival of a claims handler who encourages a surge in claims in your part of town. He says: "In many cases, these can more than offset factors that usually reduce premiums, such as a drop in the value of a car, another year of no claims, or the policyholder simply being a year older." Totting all this up, the insurer then calculates an "expected claims cost" - i.e. how much it reckons you might end up costing it that year. Finally, it adds in "claims inflation" - the number and cost of claims that it's experiencing commercially - and makes room for its own profit margin on your policy. Insurers won't reveal if auto-renewal prices tend to be higher or lower. They say this information is commercially sensitive. Our source adds: "It isn't pure profiteering: there are genuine reasons for putting up prices. But I accept there's no rational explanation for a £300 policy costing £500 the following year when there's no change in circumstance. In the case of the Gutteridges, an Admiral spokesman says: "There are many factors that are taken into account when calculating a premium. Sometimes when we make changes to how we rate on certain factors, premiums can change. We are sorry to have lost the Gutteridges as a customer. Companies such as Direct Line say more than two-thirds of its customers" car renewals currently stay the same or fall in price. Crunched: It's not just a prang that can bump up your costs, your insurer might do it automatically though insurers keep and publish reams of data about all kinds of things that affect your policy, they are very quiet about the differences in what loyal customers pay from one year to the next. But our industry source says premiums offered to loyal customers are typically between 10 and 20 per cent higher than those offered to new customers. Internal research from one price comparison website seen by Money Mail show that, since 2009, the number of drivers who don't check their previous year's premium at auto-renewal has risen considerably. Many people don't even realise what they pay from one year to the next. To find out, you will either need to dig out last year's policy document or check your bank statement if you pay annually. For those who pay monthly, the premium you last paid can be deceptive because insurers add a mark-up for those who want to spread the payments over a year. James Daley, founder of consumer group Fairer Finance, says: "Last year's premium is the only thing you really need to know - either just the precise premium or what the percentage rise might be. Unfortunately, a lot of people - particularly older people, who are not online - assume that if you haven't made a claim, then you'll get an instant benefit in the shape of lower prices. But this is not the case. Currently, there are no rules to demand insurers include last year's premium as a reminder in your letter. Earlier this year, the Association of British Insurers wrote to the City regulator the Financial Conduct Authority to suggest such a figure could improve clarity. Firms could do this voluntarily, but the ABI says it is waiting for the backing of the regulator. Specialist insurer Saga says it has launched a trial with a small band of its customers to test how helpful they find last year's premium on the renewal letter. However, it is keeping details of its operation under wraps. The regulator would back insurance firms showing last year's quote on renewal letters. An FCA spokesman says: "The ABI wrote to us earlier this year, and we're working on various projects with them. We will report back next year. However, we would support a voluntary industry code. An added annoyance for drivers is that they are forced to haggle for a cheaper deal with their own insurer. Often, just one quick phone call can get them a 10 per cent discount. A Which? spokesman says: "Should you really have to work so hard to get your prices down if your insurer can clearly insure you for less?" Insurers, meanwhile, say that printing the premium you paid last year for your policy is fraught with problems. A spokesman for Esure says: "We don't put it on the premiums because it can cause confusion among policyholders. For example, a large number of policyholders tend to change their details or circumstances within the course of a policy year - a new car or change of address. So, providing the previous year's premium would not be an accurate reflection of their current situation. The ABI says regulation is needed before it will back any publication of previous premiums. A spokesman says: "In order for these proposed changes to apply fairly and consistently to all customers, they would need to be applied across the whole market. That includes brokers, price comparison websites and other intermediaries - which can be ensured only through regulation.