The cost of living crisis has had a huge impact on all of our wallets, which is why a rise in Car Insurance premiums is far from being good news.
Unfortunately, the Association of British Insurers’ (ABI) Motor Insurance Premium Tracker has revealed that Car Insurance prices in the second quarter of 2023 hit their highest levels since they began recording the data in 2012.
Car Insurance prices reach new highs
The average premium for comprehensive Car Insurance now stands at £511. This is up 6% on the first quarter of 2023, and up 21% compared with Q2 2022.
Price rises have been felt by both renewing and new Car Insurance customers. According to ABI’s figures, those renewing their policies paid an average of £511, which is £36 more expensive than in the first quarter of 2023. New policyholders saw a smaller jump of £21, but this pushed up their policy prices to an average of £556.
But why are we seeing these increases?
Insurers’ costs have risen
Costs have gone up for everyone – including insurers.
ABI’s data shows that insurers paid out a hefty £2.4 billion in motor claims in the first quarter of 2023. This is a significant 14% increase on the same period in 2022.
This is because claims costs have risen dramatically. The cost of vehicle repairs has been pushed up by 33% year-on-year, while labour costs have shot up by 40%. The price of replacement parts has also been on an upward trajectory, rising by 12-21% over the year.
As a result, when you make a claim, your insurer has had to pay more to compensate you.
Indeed, research by international consultants EY found that for every £1 paid in Motor Insurance premiums, insurers have been paying out £1.10 in claims and operating costs. This has led EY to conclude that in 2022 the insurance market experienced its worst performance in a decade.
In addition to the rising costs of claims, the frequency of claims may also have increased.
Covid saw many of us reduce our travel, which led to risks dropping. However, many of us are now back on the road, and this has heightened the probability of a claim being made.
With higher costs and more claims, it is unsurprising that Car Insurance premiums have risen.
How can you find cheaper Car Insurance?
If your Car Insurance premium has gone up, there are things you can do to try to trim the cost.
Talk to a broker
An independent insurance broker (such as us!) will be able to scout out the wider Car Insurance market for you and find you the best deals. We’ll also be able to give you guidance on how you can keep costs down using our knowledge and experience.
Let us know if you’re a car club member
We work closely with many owners clubs and can get you better deals with insurers if you let us know if you’re a member. This is because members of car clubs are more likely to take care of their vehicles, meaning your risk to an insurer is lower.
Look at comprehensive cover
It was once the case that buying Third Party Only or Fire, Theft and Third Party Car Insurance was cheaper because you get less cover. However, insurers found that higher risk drivers were more likely to choose these options. Comprehensive cover is often therefore cheaper, so it’s worth considering.
Opt to pay a higher excess
If you can afford it, choosing to pay a higher excess should give you a cheaper Car Insurance premium. However, you should only do this if you are confident that you can afford the excess if the worst happens.
Look at the extras
Take a good look at your cover and see if there are any extras that you don’t need, such as Windscreen cover. But you should only remove cover if you are absolutely sure that you won’t benefit from it.
Add extra drivers
Adding a more experienced driver to your policy can help to bring down your Car Insurance premium. But be honest about who is the main driver. If not, you could invalidate your insurance.
Drive fewer miles
Fewer miles on the road mean a lower risk of you making a claim. Cutting your car usage can therefore be a useful way to bring down your premium. Again, it is essential that you are honest with the figure you give. If your insurer discovers that you have higher mileage than that stated in your policy, your insurance will be void.
Try fitting security devices
Fitting insurer-approved security devices could help to trim your Car Insurance costs. This is because it can make it more difficult to steal your car or can increase its likelihood of recovery. Check with your insurer first to see if this will be worthwhile.
Park your car off the road
This won’t be possible for everyone, but if you have the ability to park your car offroad overnight, you can shrink your premium a little. Better still, lock it in a garage. This will reduce the risk of your car being stolen.
Talk to us about your Car Insurance
If you’d like us to help you find the right Car Insurance for the right price, get in touch with our helpful team today. Simply call 0800 917 2274 to get a quote.