Thousands of Swinton Insurance policyholders are unwittingly having money taken from their accounts to auto-renew their policies a month before they're due to expire.

The fee, which Swinton calls a "pre-renewal" deposit, is taken from the accounts of pay monthly direct debit motor and home insurance customers 11 months into their policies. (See our Car Insurance and Home Insurance guides to get the best deals.)

The payment, which is the same as a monthly instalment, is taken before Swinton policyholders are given a new annual quote. If you decide to keep the cover, the money is deducted from the renewal price. forum user z100sx says: "I had a letter from Swinton advising me the next payment it would take would be a deposit towards next year's premium.

"I phoned it to ask about this. It said it has been doing this for several years.

"It does this before knowing what the new premium will be. If you decide against staying with it, you then have to claim this payment back."

Swinton says it's able to do this under its terms and conditions, but has always warned insurance customers not to auto-renew their policy. You're far more likely to find a cheaper deal by using a price comparison site or haggling with your existing provider.

Don't auto-renew's managing editor, Guy Anker, says: "It's almost unbelievable what insurance companies will do to lock in your custom for another year. But this really is quite shocking.

"Every driver and household needs to make sure they get in quick and compare insurance cover and prices before they find they're locked into a pricey policy that might not even provide the cover they require."

Can I get a refund and cancel the renewal?

If you've been caught out by Swinton's pre-renewal deposit, the amount can be refunded free if you don't want to stay with Swinton – but only if you tell it before the new policy starts. This will also cancel the imminent new cover.

If you fail to cancel the new policy before it starts, it's £25 to cancel within 14 days after the renewal date, and £50 after that. Customers can get a refund on their pre-renewal deposit by contacting a Swinton branch or by calling 0800 072 5131.

Will the pre-renewal deposit affect my credit rating?

When you decide to pay for an insurance product on a monthly basis, your provider will perform a credit check which leaves a record on your credit file. However, Swinton says the pre-renewal deposit being taken will not show up on your credit file, meaning it won't have an impact on your credit rating.

What does Swinton say?

The small print in Swinton's terms and conditions states: "Up to one month before your renewal date, we will collect a deposit payment ahead of your new policy commencing. This will be for the same amount as your monthly payment on your current policy. This deposit will be deducted from your next year's renewal cost."

A spokesman for Swinton adds: "Swinton operates a pre-renewal deposit and direct debit facility. The auto-renewal of policies is designed to be convenient for our customers, ensuring they do not find themselves uninsured and it helps us manage a huge number of transactions each year.

"It is very easy for customers to receive the pre-renewal deposit back. They simply need to contact a local branch, either face-to-face or over the telephone or call our freephone number to speak to someone in the contact centre. We do not offer this facility online as we want to ensure the transaction is processed correctly for the customer."