It’s news that none of us want to read, but car insurance costs are increasing. Competition has helped to keep prices the same, or even to drop, over the last couple of years. That meant the average premium was £468 in the third quarter of 2019. (That was £3 less than the average premium in the same quarter in 2018). But it looks like changes are now on the way. We explain the reasons behind the likely premium increases, and what you can do to find yourself a better deal.
1) Firstly, there are changes to the Personal Injury Discount Rate
In July 2019, the government made changes to the Personal Injury Discount Rate. This is the formula that is used to calculate how much compensation can be awarded to someone who is injured. With compensation for some injuries likely to go up, it means that insurers may have to pay out more. And that risk translates to higher premiums for drivers. This will really hit younger drivers, who are considered more likely to have an accident resulting in a personal injury claim.
2) Secondly, modern cars are more expensive to fix
From electric mirrors to parking sensors, the small things that make driving easier and safer also cost more to fix. And that means that insurers have to pay out more if there is a claim for damage. For example, in the first six months of 2019, insurers paid out repair bills totalling £2.3billion. That’s an increase of 11%compared to the previous year. Even if you own a basic model, you may have an accident with a more sophisticated vehicle. So your premiums are likely to rise to cover the anticipated increases in repair costs.
3) Thirdly, theft is on the up
Home Office figures reveal that car theft has doubled in the last five years. So it’s little surprise that figures from the insurance industry show the cost of theft has also risen. For example, in the first half of 2019, insurance companies paid out £211 million for vehicle theft. That was up 18% on the same period the previous year.
The increase in keyless car crime is thought to be behind much of this rise. With keyless car crime, two criminals work together to gain entry to your car. They use electronic signal relay devices to ‘fool’ the car into believing the key is present. Once the car is unlocked, they can simply press the button to start and drive away. According to the BBC it takes just 10-seconds for thieves to get into your car with this method.
4) What you can do today to beat the price hikes
Of course, there are things you can do to help combat the price increases and save yourself some money:
The single best way to get a better price deal is to shop around for your next insurance policy. It simply does not pay to stay loyal to the same insurance company. Make the effort to get as many quotes as you can, and you’ll be surprised by just how much you can save. Using a price comparison website can be a great place to start. However, you need to be aware that these websites charge insurance companies to display their policies. The Telegraph reveals that this charge could be as much as £160, which it’s estimated is passed on to you, the customer. If you don’t have time to contact insurance companies yourself and don’t want to rely on comparison websites, there is another way. Use an independent insurance broker, like Park Insurance, to do the legwork for you. When you use an insurance broker you can benefit from their expert knowledge about insurance. That can ensure you have the cover you need without paying for anything you don’t. Large brokers like us also have significant buying power. Once we’ve found the right policy for you, we will negotiate hard on your behalf to secure the best price.
The number of years no claims discount you hold can really make a difference when it comes to your premiums. Whilst no one can predict what’s around the corner, by driving safely you can help to prevent some accidents. For example, stick to the speed limit and you’ll find it easier to stop in an emergency situation. If you have built up a good number of years with no-claim, consider protecting it. For a small additional premium you can buy no-claims discount protection, so even if you do make a claim you still hold on to your no-claims discount.
Penalty points on your licence can also mean a big rise in the cost of your insurance. So don’t speed and put your mobile phone away when you’re driving. You could also consider a telematics policy. This rewards safer driving with lower premiums. But be warned, if the ‘black box’ spots you’ve been braking hard or exceeding the speed limit, your premiums will rise.
Don’t just go for the cheapest deal
In an article about saving money on car insurance, this may seem an odd piece of advice. However, you need to be aware that not all car insurance covers everything you expect. You always need to read the small print carefully. If you don’t, you may find out too late that you don’t have the cover you think you have. And that can leave you seriously out of pocket. It’s particularly important to check details if you’re buying from a price comparison website. That’s because insurance companies can pay for their policies to be shown to potential customers even if they are different to what you have specified on your form.
Don’t wait until the day before your insurance runs out to renew. Car insurance premiums are based on risk. Unfortunately, leaving it until the day before your insurance expires to get a quote can make you look like a more ‘risky’ person. For the optimum price, get your quotes around two weeks before your current policy expires.
For more tips and advice read our article sharing 14 ways to save money on your car insurance.
We can talk you through all your options to find you the right deal at the best price. Talk to our expert team on 01179556835 today