You’ve had an incident free year of motoring and added another year’s no claims bonus. Naturally, you think your car insurance costs are going to reduce. But they don’t.
The Association of British Insurers (ABI) says that the average car insurance premium rose 8% last year to £462. Consultancy EY predicts further rises of around 9% this year, which will mean an extra £28 being added to the average premium. But that’s just the average – for some drivers the predicted increases run much higher.
So why are prices rising? Find out what’s causing the hikes and what you can do to get a better deal on your car insurance with our guide.
1) Changes to personal injury pay-outs
Earlier this year, experts warned that changes to injury pay-outs could see some car insurance premiums rise significantly. The changes to the Ogden formula are expected to add around £75 to the average car insurance premium. Because of the way the formula is worked out, young drivers are hit the hardest by these changes, with estimates of increases up to £1000 for drivers aged 18-22 years old. Older drivers could also be hit with increases up to £300 if you’re over 65 years old.
2) Insurance fraud
Insurance fraud continues to drive insurance prices up for everyone. Organised gangs deliberately crash vehicles into innocent motorists or make dishonest claims for accidents. To cover costs, insurance companies have to charge everyone more. This ‘crash for cash’ fraud costs us law-abiding policyholders an extra £390 million each year.
3) Insurance Premium tax rises
In June this year, Insurance Premium Tax (IPT) rose again and automatically added ££s to every insurance policy. IPT is now set at 12% – which is double the rate it was in October 2015, when it was only 6%.
4) Modern gadgets in our cars
Once a small prang would be relatively cheap to put right. Now car bumpers are equipped with sensors and cameras, it can be a lot more costly to fix – and that drives up your premiums.
Get cheap car insurance
Whilst car insurance prices look set to continue rising, there are still steps you can take to get a better value deal on your car insurance:
- It doesn’t pay to stay loyal
Just because your current car insurer was the cheapest premium last year, it doesn’t follow that it will be again this year. In fact, many insurance companies rely on us to simply opt for the convenience of a straightforward renewal. To get the best price out there for your car insurance you need to take the time to shop around for a new quote every year. Comparisons websites can be a good place to start, but remember not every insurance company is represented on every comparison site. If you don’t have time to do the calling round, or are not sure what to ask for, get your insurance broker to do this ringing round for you. Brokers are in a powerful position for negotiating good value deals without compromising on the level of cover you get.
- Consider a telematics policy
If you consider yourself a safe driver, a telematics or ‘pay as you drive’ policy could be cheaper. A device is fitted to your car that records how safely you drive. It takes into account things like your speed, braking and the time of your journeys. ‘Safe’ driving can mean cheaper premiums, although driving that is not considered safe could see you facing higher premiums.
- Remember the cheapest deal isn’t always the best deal
It can be tempting to opt for the cheapest option, especially if you’re using a comparison website to check prices. But beware of what cover might not be included with these deals. Always read the small print carefully to make sure that the policy covers everything you need to.
Contact our friendly team for low-cost car insurance you can count on
At Park Insurance, our expert car insurance team has been helping drivers to get the best value car insurance for over 30 years. We’re independent, which gives us the freedom to negotiate low-cost deals from the UK’s leading insurance companies. We’ll talk you through your options and tailor-make your policy to match your needs. That way you won’t pay for anything you don’t need, but you will get the level of cover you do need. Get in touch or call us now on 0117 9556835 for a free no obligation quote.