Car insurance rises for first time in 18 months
Car insurance premiums have risen for the first time in 18 months, according to financial services company Confused.
Data revealed today that insuring a vehicle is £12 more expensive than it was a year ago, causing the average premium to be as high as £550 per year.
“Car insurance costs are starting to increase, and this is mostly down to the fact that we’re driving a lot more now than we were 12 months ago, and this means the number of claims insurers are paying out on is likely to have increased too,” commented Confused’s chief executive Louise O’Shea.
Even though current prices are the highest since the end of 2020, things could get even worse for motorists who are sticking with their renewal plans.
According to additional research, 42 per cent of drivers who renewed their premium saw prices go up significantly.
Most motorists were also wrongly convinced that regulations set in January by the Financial Conduct Authority (FCA) would mean their renewal would not increase.
Under the new set of rules, insurers need to offer the same tariff to both new and returning customer, abolishing the “new customer discount”.
O’Shea explained that despite the recent FCA changes, motorists could still see their premiums go up and that is why they need to shop around for better deals.
“It’s worrying that so many people believed the pricing changes that came into effect in January would guarantee them a cheaper price, and I have no doubt they had quite a shock when they received their renewal notice and it was higher,” she added.
“Prices have increased, but it’s very likely that there will be another insurer that can offer a better price for the cover you need, as the market is more competitive than ever.”
Premiums could also increase following the upcoming changes to the Highway Code involving self-driving cars, which see liability falling onto insurers instead of users.
“This shift of liability to motor insurers could in theory lead to higher motor insurance premiums because insurers could face a higher bill when accidents occur – particularly when vehicles are fitted out with expensive technology,” said Josh Hughes, partner at law firm Bolt Burdon Kemp.
“However, proposed legislation does permit motor insurers to recover their outlay from the manufacturer or software developer once the injured victim is compensated.
“This should serve to limit any increased costs they face by self-driving cars.”