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Car insurance premiums race ahead

Car insurance premiums race ahead

Category: Car insurance

Updated: 21/09/2016
First Published: 21/09/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Car insurance only ever seems to be on the rise, and unfortunately, this upward spiral shows no signs of ending any time soon. Instead, average premiums have ramped up again – and they're expected to do so further in the months ahead.

Figures from insurance market research experts Consumer Intelligence show that car insurance costs are continuing to race ahead, having risen by 13.5% in the past year to an average of £788. However, there are vast differences between different sectors of the population, with age and even geography playing a part.

For example, drivers in the North West and London are paying up to 50% more than the national average – motorists in the former will have an average bill of £1,177 after a 17.3% increase year-on-year, while those in the capital will pay an average of £1,068 after being hit with a 16.7% rise. The cheapest place to be a driver is in is Scotland, where average premiums stand at just £562 (up 12.1%).

It may come as little surprise to learn that it's younger drivers who pay the highest bills of all, with average premiums for under-25s standing at a whopping £1,831. In slightly better news, their prices are rising slightly slower than the average at 9.4%, but this will come as little consolation to those struggling to cover their premiums. Conversely, older drivers saw higher price rises of 15.3%, but their average annual bill still clocks in at £348, more than five times less than their younger counterparts.

Is there anything you can do to lower your premiums? Well, younger drivers in particular may want to look to telematics insurance policies. Many drivers are benefiting from this "black box" technology, which monitors your driving (including your speed, acceleration and cornering) and offers discounts based on how well – and how safely – you handle the car. Indeed, around 55% of the most competitive premiums for under-25s come from telematics policies, so it could pay to consider them.

Then there's the age-old wisdom of shopping around, something that will become even more important in the months to come when the insurance premium tax (IPT) is increased yet again. It's less than a year after it was initially ramped up from 6% to 9.5% and it had a swift impact on insurance premiums, and there are fears that the new increase, which will see IPT rise to 10% on 1 October, will have a similar effect.

Ian Hughes, chief executive of Consumer Intelligence, said that the forthcoming increase is already driving the rise in premiums, as are rising claims – but happily, price comparison is enjoying a similar boost.

"We are seeing a real acceleration in shopping around, and all customers need to ensure they're receiving the best value for money from their insurer," he said. "This should be easier as providers need to make it clear what last year's premium was when they send renewals, while under-25s also need to seriously look at black box technology as a way of limiting price rises."

These days, we all know that we shouldn't just accept the auto-renewal offer given to us by our car insurance provider, and this is becoming even more important amid ever-spiralling prices. So, don't arrange your new policy before you know what else is out there – use our car insurance comparison tool to see if you can find a better deal.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.