Car insurance costs jump
how to cut the cost of cover
The average cost of the most competitive motor insurance deals has jumped by a record 21.1% in the past year, the steepest annual hike in costs for nearly a decade.
According to Consumer Intelligence, the cost of insurance has soared due to a shortage of new and used cars, along with the impact of inflation on car parts, repairs and servicing. The decision by regulators last year to ban ‘dual pricing’, where new customers could be offered cover at a much cheaper price than existing customers, has also bumped up costs.
Ian Hughes, Chief Executive of Consumer Intelligence, said: “This is the largest yearly increase we’ve seen since we started tracking premiums in October 2013 and during the last three months alone premiums have soared 6.7%. That’s the second largest quarterly increase we’ve ever witnessed as well.”
The sharpest increases in car insurance costs over the past year are in the East Midlands and London, where annual premiums have risen by 26.4% and 26.3% respectively. The lowest price rises are in the North East, where insurance costs have gone up by 12.1% over the year.
Drivers in the South West pay the lowest premiums, at an average of £576 a year, whilst those living in the capital pay the highest premiums, at £1,419 a year.
Prices have increased the most for drivers aged 50 and over, even though they are statistically less likely than younger drivers to have an accident. The over 50s have seen premiums increase by 22.4% over the past tear to an average annual cost of £462, whilst premiums for the under 25s have risen 17.9% to an average of £700 a year.
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Ways to beat rising insurance costs
Higher car insurance costs are the last thing motorists need, especially given the fact that so many other household bills have risen sharply over the past year.
However, there are ways you may be able to reduce the cost of your cover.
1) Pay for cover annually rather than monthly. If you can afford to, try to pay for your insurance up-front rather than spreading premiums over the year. According to research by Comparethemarket.com, motorists could save an average of £65 by paying their car insurance premiums in one go rather than in monthly instalments.
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2) Beware fees. Nearly half of car insurance policies now include set up fees, according to financial information provider Defaqto, with nearly three in 10 products charging £60 or more to cancel the cover after the cooling off period. Always check the terms and conditions of any policy carefully before you buy, so you won’t be hit by any unexpected charges.
3) Don’t stick with the same provider. Loyalty rarely pays when it comes to insurance, so it’s always worth shopping round to see if you can find a more competitive deal before you accept the renewal quote offered to you by your current provider.
4) Get your mileage right. You might be paying more for your car insurance cover than you need to because you’ve over-estimated the number of miles you drive each year. It’s important to be as accurate as possible, as the lower your mileage, the less expensive your premiums will be.
5) Don’t pay for extras you don’t want. Read the small print of your car insurance policy and you might find that it includes added extras that you don’t actually want, such as windscreen or breakdown cover. These will bump up the cost of your premiums so if you don’t think you’ll use them, you can ask your insurer to remove them from your policy.