Car insurance bills only ever seem to be rising, but did you know just how quickly they're ramping up? According to research from Consumer Intelligence, car insurance bills are now rising five times faster than inflation, which take average annual bills to £755.
The figures show that the average annual bill has risen by 14.6% in the last year, significantly higher than inflation, which currently stands at 2.9%. The slight silver lining is that the pace of growth has slowed in the last three months, said the report, but the annual hike could still add a huge amount to your premiums.
Perhaps surprisingly, older drivers are feeling the biggest impact, with average premiums for the over-50s rising by 16.5% in the year to September, but their bills are still the lowest at an average of £434. Conversely, although premiums for under-25s rose slightly less – they edged up by 11%, as growing use of telematics (or black box technology) curbed prices – they still pay nearly four times more than older drivers, at an average of £1,719.
Costs are ramping up even more when looking on a longer-term basis; since October 2013, the report estimates that average car insurance premiums have increased by a whopping 32.2%, so it's little wonder that consumers are getting a bit fed up with the whole thing.
The report says that recent Government proposals to increase the Ogden rate – the calculation that sets payouts for major personal injury claims – has helped to stabilise prices in recent months, but the ongoing impact of Insurance Premium Tax (IPT) hikes, the most recent of which was implemented in June, is still taking its toll. So, too, is the weakness of the pound, and rising claim costs only add to the pressure and mean premiums are still climbing.
"Prices are stabilising, but the future is unclear with the new Ogden rate, whiplash reforms and the possibility of another Insurance Premium Tax rise in the Budget," said John Blevins, Consumer Intelligence pricing expert.
"Car insurance claim costs have increased in the past three months, partly because we are driving more technologically advanced cars which cost more to repair, but also because the weakness of the pound means the cost of parts is rising.
"Older drivers, meanwhile, are being hit with higher premiums because they are driving for longer, and consequently are becoming involved in more accidents."
It can be difficult to avoid car insurance price rises sometimes, but one of the best ways to avoid being hit with a hike is to compare quotes when it's time to renew. Never accept your current provider's offer before you've seen what else is out there, and always pay close attention to the renewal notice – new rules that mean you're now told what the difference is between your new and previous premium will make it easier to see if you're being ripped off, and can help you investigate whether another provider can better it.
If you're a younger driver, you may also want to consider telematics policies – those that reward good behaviour by recording and analysing your driving style – to bring costs down. Indeed, the research found that 65% of the most competitive prices for under-25s come from telematics policies, and they make up one in five of all Best Buy quotes, which means prices for younger drivers are actually still slightly lower than they were in 2013.
It isn't just this age group who could benefit, either: 11% of the best deals for those aged 25-49 are through telematics policies, too, as are 7% of the best deals for those over 50, which means these policies could become even more widespread. Speak to your insurer to see if they can offer such a deal, or use our car insurance comparison tool to start researching more options.
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.