DRIVERS are overpaying for motor cover by more than £1 billion a year because they fail to shop around or consider switching to telematics-based policies at renewal time.

New car sales peak in March, making it one of the busiest months for insurance renewals, but millions are not taking the chance to slash their premiums.

Almost two-thirds of drivers allowed their cover to automatically roll-over last year, meaning they missed out on discounts available elsewhere to new customers.

Nearly a third have been with the same insurer for three years or more, and one in six automatically renew without checking if they are still getting a good deal.

According to price comparison site GoCompare, 4.6 million drivers rolled over their insurance at their last renewal without shopping around for a better price, overpaying by up to £262 each, or a combined total of £1.23bn.

Discounting the option of telematics could be even more costly, as Compare the Market calculates this could cut the average driver’s premium by almost £500 a year.

Telematics policies use a black box installed in the user’s vehicle to relay information about their driving to the insurer. This data enables them to provide a personalised quote based on risk, reducing charges for safer drivers.

Yet the vast majority maintain they would not consider this type of cover, often because they think that only drivers in their teens and 20s will gain.

In fact, it could result in substantial annual savings for nearly three out of 10 road users.

Dan Hutson, head of motor insurance at Compare the Market, said: “There is a common misconception that telematics policies only benefit young drivers, whereas people of all ages stand to save considerable amounts.

“As the cost of insurance seems set to rise throughout 2019, telematics can offer a great way to avoid expensive premiums, so driver scepticism around this technology is worrying.”

According to the comparison service, 35 per cent of drivers do not realise telematics could lower the cost of their cover, and only 14% are likely to choose this type of policy when their insurance comes up for renewal.

When asked why they had not switched to telematics, 17% confessed they could not be bothered, while13% said they had never heard of it.

Fifty-six per cent of those questioned admitted they were afraid to share personalised data with their provider in case they were found to be a bad driver, and 19% said they did not want to risk being charged more as a result.

Many motorists were also concerned that having a black box with one provider might make it is more difficult to switch in future.

Most units cannot be transferred between insurers, meaning customers who move on cannot share their driving record with their new provider and must get a new box installed.

Despite these issues, Compare the Market calculates that telematics could save drivers an average of £482 a year.

Just 7% of quotes provided by the site last year were for these policies, but they were cheaper than traditional ones 27% of the time.

The potential benefits are greatest for drivers aged 17 to 24, whose lack of experience puts them at most risk of accidents, leading to much higher premiums.

A telematics policy could typically save 17 to 20 year olds £1,451 and cut the cost for 21 to 24 year olds by £425, making it the cheapest option for these age groups 68% of the time.

But older drivers also stand to gain significantly. Those aged 25 to 29 could save an average of £243, while 30 to 39 year olds might save £249.

And the advantage is even greater for those with more years behind the wheel. Those aged 40 to 49 could reduce their premium by an average of £516, and 50 to 64 year olds could typically save £484.

The benefits decline as drivers get even older but are still worthwhile. In the 65 to 79 bracket telematics is typically £343 cheaper, while those aged 80 and over could expect to save £145.

Mr Hutson said: “Motorists agree that black boxes could make driving safer and more affordable, but this alone seems not enough of an incentive to switch providers.

“Our research suggests that if drivers were able to take their black box with them, over a third more people would consider purchasing telematics and would potentially save a lot of money in the process.

“For drivers to truly embrace the benefits of telematics policies, the industry must work to fix this interoperability issue and make switching black box providers as easy as possible.”