The cost of annual comprehensive car insurance soared 39.3 per cent in the 12 months to the end of September – the biggest annual jump recorded since the benchmark AA British Insurance Premium Shoparound index started 16 years ago.
Young drivers bore the brunt, with their premiums surging an average of 51 per cent. Men aged 17 to 22 can expect to pay annual premiums of around £2,500, even after shopping around, and women £1,400, compared with an overall average of £792.
Simon Douglas, director of AA Insurance, attributes the rise to the number of under-25s injured and killed on Britain’s roads. The growth of price comparison sites had also kept premiums artificially low for some years and the recession has also played a part.
“Five years ago we warned that sharp premium inflation would be the result of this, but recession has added to the pain,” he says.
“A proliferation of personal injury claim lawyers has also led to the number of injury claims sharply increasing, while fraud has also eaten into insurers’ costs. Over the past year, for every £100 taken in premiums, £123 has been paid out in claims.”
The index from comparison website Confused.com and industry expert EMB shows a similar trend, though price hikes have slowed down. The cost of comprehensive cover rose by 8.6 per cent between July and September, less than the 14.2 per cent recorded the previous quarter.
WAYS TO SAVE
The easiest way save to money is to not accept your renewal quote and shop around. Those who do so through moneysupermarket.com are saving an average of £237 – almost £100 more than last year. “Car insurance providers are always trying to attract new customers, so will offer discounts,” says Michelle Slade at Moneyfacts.co.uk.
If you can spare the lump sum, pay annually. Most insurers charge extra for paying monthly. Debenhams and Asda charge motorists 28.6 per cent, says Moneynet.co.uk.
Increasing your excess can also bring the cost of cover down. Only ask for a courtesy car
or legal expenses if you really need them; the less your car insurer has to provide in the event of an accident, the lower your costs.
Avoid modifications: they can be deemed to pose an added safety risk. Fit an approved alarm and immobiliser, such as a Thatcham 1 or Thatcham 2. Some insurers even insist on sophisticated tracking devices to insure expensive cars.
Check your mileage estimate: make sure you’re not paying for miles you’re not covering. If you change jobs and have a shorter commute to work, you could save money. Don’t estimate too low, as inaccuracy could jeopardise a claim.
Park in a locked garage or driveway overnight. This reduces premiums as your car will be
safer from theft or vandalism.
New drivers should consider taking the Pass Plus examination, which can only be obtained within the first year of passing. The savvy 6 per cent of men who do save an average of £1,038 before they reach 25, with girls saving £390, according to Confused.com.
Adding an experienced driver to your policy as a named driver can result in cheaper quotes, so if there’s any chance a parent will need to borrow the car then add them on. Don’t be tempted to make them the policyholder if you are the main driver however: this is known as ‘fronting’ and is considered fraud.