It’s hard to tell where you stand at the moment. Interest rates are all over the place, there’s talk of recession coming, household bills are on the rise, and fuel costs are through the roof. And they are just the most obvious ways that life has become more expensive. If you’re about to insure your car don’t be surprised to find that another cost that has quietly crept upwards recently.
According to the Association of British Insurers (ABI), sustained cost pressures on the insurance industry are continuing to push the average cost of motor insurance to a record high.
The average price paid for motor insurance in the second quarter of 2023 continued its upward trend as insurers battled rising costs, such as a 33% rise in vehicle repair costs, according to the ABI’s latest Motor Insurance Premium Tracker.
The tracker shows that in the second quarter of this year the average premium for comprehensive motor insurance was £511, up 7% on the previous quarter. The average price paid by motorists renewing their cover rose by £36 on the previous quarter to £471, while the average premium for a new policy was up £21 to £566. The current average premium is 21% higher compared to this time last year and is at its highest level since the ABI started collecting this data back in 2012.
To put that into some sort of context, one customer reported insurance quotes for a 1993 Micra and a 2022 MINI (nothing special, just an example of average family cars) went up from £600 to £960 per year.
In June, analysis from international consultants EY said that “the UK motor insurance market experienced its worst performing year in a decade in 2022”. Their report highlighted that for every £1 motor insurers received in premiums, they paid out £1.10 in claims and operating costs.
Higher premiums are reflecting the rising costs for insurers
In total, insurers paid out £2.4 billon in all motor insurance claims – theft, vehicle repairs, and personal injury - in the first quarter of this year. The costs of vehicle repairs leapt by 33% over the year to £1.5 billion thanks to rising costs including energy inflation, and more expensive repairs. Increases in labour costs were reported to be up to 40% while the cost of replacement parts has increased by around 20% over the past year.
These are tough times for motorists and insurers alike, and no one wants to see the cost of their motor insurance rise. There isn’t a great deal you can do about the rising costs of repairs affecting the insurance industry, but there are a few little tips you can follow to try and keep your own car insurance costs down.
Tips to keep your insurance costs down
1. LIMIT YOUR MILEAGE
Limit the number of miles you drive each year as fewer miles means you’re a lower risk for insurers, so cheaper to insure.
2. PAY ANNUALLY
Paying monthly for car insurance is a loan, with interest added, so paying for your car insurance in a lump sum will work out cheaper.
3. IMPROVE SECURITY
Improving your vehicle's security could get you cheaper premiums. Think about installing devices such as alarms, immobilisers and locking wheel nuts.
4. INCREASE YOUR VOLUNTARY EXCESS
Choosing a higher voluntary excess when you take out your policy will reduce the price of your insurance.
5. BUILD UP YOUR NO CLAIMS BONUS DISCOUNT
Building up your no-claims bonus discount will help you to get a cheaper policy because insurers reward motorists who are claim-free with discounts on their premiums.
6. ONLY PAY FOR WHAT YOU NEED
Don’t choose a more expensive policy with unnecessary add-ons - go for one that has everything you need for a great price. Comparing insurance should help you find the right insurance for the right price.
7. SEE IF IT'S CHEAPER TO BUY ADD-ONS AS SEPARATE PRODUCTS
Car insurance add-ons can include things like breakdown cover, a courtesy car, legal cover, etc. These may work out cheaper if you buy them separately so double-check before you add them to your insurance policy.
8. CONSIDER YOUR COVER TYPE
If you have an older car that isn't worth very much, a third party, fire and theft policy rather than comprehensive cover could save some money.
9. PARK WITH CARE
If you have a garage or driveway, park your car there overnight.
10. TAKE CARE WITH EXTRA DRIVERS ON YOUR POLICY
Putting an additional driver on your policy can bring your premiums down, if they’re experienced. Likewise, adding a young driver could send the premiums skywards.
11. THINK ABOUT WHAT VEHICLE IS BEST FOR YOU
It’s a lot cheaper to insure a Fiesta than a Ferrari so choose your car sensibly.
12. AVOID MODIFICATIONS
Adding alloy wheels, body kits and performance upgrades could make your car a lot more attractive to thieves. Modified cars also tend to be more expensive to fix than ordinary cars due to the expensive parts.
13. TAKE A DRIVING COURSE
Although advanced driving courses such as Pass Plus and IAM cost money, they could get you a discount on your insurance with some providers, especially for young and inexperienced drivers.
14. THINK ABOUT HOW YOU DESCRIBE YOUR JOB
If, for example, you don't commute, you may be able to find a cheaper policy by describing your insurance as being 'for social use’. The way you describe your job can also affect your premium. While a 'chef' might pay a different premium to a 'cook’, and a ‘hairdresser’ might pay a different price to a ‘barber’.
15. CONSIDER A TELEMATICS POLICY
Telematics car insurance bases premiums on actual data about your driving, which is recorded by either a black box fitted in the vehicle or a mobile phone app. As an added bonus the black box acts as a tracker if your car gets stolen.
16. PAY ATTENTION TO ADMINISTRATION CHARGES
If, for example, you change your car, your job or your address, some policies will allow you to make the change for free - but others could charge around £50. Paying £5 or £10 more for a policy with reasonable admin fees could save you much more in the long run.
17. SHOP AROUND FOR THE RIGHT QUOTE
It doesn’t have to take a long time to check whether you could get a cheaper deal. Make use of one of the many comparison sites to speed up the process of shopping around for the right quote.
18. WHEN TO RENEW YOUR CAR INSURANCE FOR THE BEST PRICE
The worst thing you can do is let your policy “auto-renew”. You can buy your car insurance up to 29 days before the policy start date and 'lock in' the price you're quoted on that day. The closer to the renewal date you get, the more you could end up paying.
19. BEFORE YOU LEASE YOUR NEW CAR, CHECK WHAT THE INSURANCE COST WILL BE
We wouldn’t want to stop you leasing the car of your dreams, but it’s worthwhile ensuring you don’t get a shock when you try to insure your new lease car new lease car from Gateway2Lease.
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