The average UK car insurance policy is expected to break £800 in June

 
Georgina Varley
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The average car insurance policy price has risen by almost £100 in the past year (Source: Getty)

The average car insurance policy in the UK is projected to reach £800 a year from next month, according to new research by Comparethemarket.com.

This is the highest figure ever recorded by the price comparison site.

The average price of a car insurance policy has risen by almost £100 in the past year and by £200 since June 2015.

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Simon McCulloch, director at Comparethemarket.com, said: "This is somewhat of a watershed moment for car insurance. The cost of an average policy has risen by around a third in two years, demonstrating just how difficult it is for people to get on the road."

These findings reflect research published by KPMG in January, which revealed that 74 per cent of executives believe that more than half of car owners today will not want to own a vehicle in the future.

Commenting on the increase in the price of insurance, McCulloch said "One of the most prominent causes of these rises is the doubling of insurance premium tax over the past two years. Equally, the recent decision by the Ministry of Justice to change how compensation is calculated, has also added substantial amounts to the average person’s policy."

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The discount rate was adjusted from 2.5 per cent to minus 0.75 per cent early this year. Following the announcement, buyers rushed to purchase cars before the changes came into place at the beginning of April. Consequently, while the UK's new car market grew by 8.4 per cent in March, it then dipped 20 per cent the next month.

Read more: UK car sales rev to historic high driven by incoming tax change

“Low interest rates and the cyclical nature of car insurance, have also played a part in rising premiums, but the hyperinflation caused by these governmental changes has disproportionately pushed up the cost of driving," added McCulloch.

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