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If you've recently needed to renew your car insurance, the chances are you’ve received a big shock.
That’s because new research shows average premiums have rocketed by just under 20% over the past year. That’s almost seven times the current rate of inflation and the largest-ever annual increase.
Average premium up 20%
The average premium is now £564.69 – up 19.6%, according to a detailed and independent survey by market research experts, Consumer Intelligence. They looked at 100,000 quotes covering every type of driver from the young to the old; those with clean driving licences or with dodgy driving histories, and for all types of car from the runabout to the supercar.
And for younger drivers – those aged 17 to 24 - the news is even worse, with average premiums now almost a quarter higher (24.87%) over the year. This age group was already facing an average bill of £1,275 last January but now they’re having to pay just under £1,500!
Women's premiums up 19%
Men saw the largest increase on their premiums at 20.1% to an average of £599.65. However, women have nothing to celebrate given that their premiums rose by almost as much – 19.1% to £523.55.
Older drivers might get some satisfaction that younger drivers are suffering the most but they’ve still no reason to celebrate because although the over-65s have seen the smallest rise in premiums, it’s still only a whisker under an eye-watering 15%.
According to the insurance companies, the reason for the rise has been the rising cost of personal injury claims and fraud.
Regardless of how accurate this statement is, Britain’s drivers are collectively going to be putting an extra £2 billion into motor insurers’ pockets this year alone as a result of these rises.
The grim figures by age group, look like this:
17 – 24 year-olds. Premiums up 24.87% from £1275.60 last January to £1489.44
25 – 34 year-olds Premiums up 22.01% from £505.70 to £607.17
25 – 44 year-olds Premiums up 18.92% from £430.23 to £506.55
45 – 54 year-olds Premiums up 17.82% from £348.98 to £406.57
55 – 64 year-olds Premiums up 15.99% from £323.45 to £375.92
65 and over Premiums up14.96% from £366.07 to £423.02
So what can we do about it?
The good news is that the survey revealed that of those drivers who switched their insurance providers during 2009, 55% managed to save more than £50 on the renewal prices they were being offered by their existing providers.
But without doubt, the best news is that the research looked at the value of shopping around for cover and discovered that those carrying out the most comprehensive search for the best price could save up to 35%.
Ian Hughes, Managing Director of Consumer Intelligence, said: “The advent of price comparison websites had actually kept a lid on car insurance premiums for some time, but these figures show the upward pressure on pricing has well and truly broken through. The worry, obviously, is that this could result in more motorists simply choosing not to insure their vehicles and drive illegally, or feel that they can no longer afford to run a car.”
Premiums might have “broken through” the downward pressure caused by price comparison websites but don’t think that shopping around will no longer pay off.
As Mr Hughes added: “In order to reduce their car insurance premiums, motorists need to consider what sort of vehicle they drive, and make sure that they shop around for cover. With such a large number of providers to choose from, the difference between the best and worst quote can be huge.”
So shopping around is still the number one way of saving money. But there are other tried and tested ways to reduce premuims.
Check the insurance rating on your car before you buy it. So many of us forget to do this and yet it makes a huge difference!
Many insurers expect you to do an average yearly mileage of around 12,000 miles. If you drive less than this, tell them - you might well get a reduction and you can also feel good about your carbon emissions!
Park off the road if you can. Parking in a secure location – ideally a locked garage or at least in a secure designated off-road parking spot - will almost certainly reduce your premiums.
Most of the big insurance companies offer all forms of insurance such as home, life etc. You may receive a discount for buying multiple forms of insurance with the same company but this will prevent you from shopping around, so be careful.
Avoid high interest rates - Interest charges are often very high if you pay your premium in monthly installments. It is usually considerably cheaper to pay your premium in one lump sum.
Buy online as premiums are often about 10% cheaper when you buy on the internet.
