Premium Pain - The Real Reasons Your Car Insurance Costs More
Hit the brakes on out-of-control car insurance premiums with these tips from Paul Lewis
Everyone who runs a car knows that the cost of motor insurance has been rocketing up. The industry trade body the Association of British Insurers says premiums rose by 21% year on year for the quarter ending in June. The price comparison site Compare the Market says premiums for new customers rose by 49% from September 2022 to 2023 and the average premium is now £848 a year, or £16 a week.
RT readers have reported even bigger rises. Tony emailed: “Why has my recent renewal quotation trebled since last year? Same car, same drivers, same place, same miles, and same no-accident record!”
The industry says premiums are rising partly because of soaring costs, such as a 46% rise in the cost of repairs. Accountants EY found that last year insurers paid out nearly £1.10 in claims for every £1 in premiums they took. As a result, some firms, such as RSA, have left the business and the remaining firms are raising prices.
Others blame changes in regulation that banned insurers from tempting new customers with low premiums that they slowly increase each year. Maybe they’re whacking up prices for all customers instead.
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There are measures that can reduce your premium, though. You could, for instance, agree to pay a higher excess – the amount of a claim that you pay before the insurance company pays out. Just make sure you’ll be able to afford the higher excess if you have a claim. And if your car gets a small scratch or dent, and you wonder if it’s worth claiming, don’t ask the insurer! Making that call will push up your premiums next year even if you don’t make the claim.
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Get rid of things you’re paying for but don’t need – do you actually need legal advice insurance, or a replacement car while yours is off the road?
Meanwhile, a black box is a monitoring device that logs your use. It can reduce your premiums if you agree not to drive at night or more than a certain number of miles, especially if you are young or a new driver. And of course question any premium rise – and go online or to a broker to look for a cheaper one.
QUESTIONS? Send any questions to Paul.Lewis@radiotimes.com. Paul cannot answer you personally, but will reflect them in his column.