Misery for Motorists as UK Car Insurance Premiums Rise

Rarely has it been tougher to be a motorist in the UK. New car prices are significantly higher in the UK than they are for the rest of Europe, petrol and diesel prices are now in excess of £1 a litre and car insurance premiums are increasing at inflation-busting rates.

The annual car insurance premium for an average policyholder has risen from £594 to £624 since January 2007, according to research from the AA’s British Insurance Premium Index. This equates to a 5.9 per cent rise – more than double the 2.1 per cent inflation rate outlined by the Government.

So what has caused the rise in car insurance premiums?

There are many factors that can potentially be blamed including higher medical costs for those making personal injury claims and an increase in repair bills due to more advanced and sophisticated engines.

Some of the blame is also falling on the shoulders of young drivers who are ten times more likely to get involved in a crash than motorists over the age of 30. In fact, many UK car insurance companies, including household names such as Axa, Swiftcover and Saga, are now refusing to offer quotes to young drivers at all.

Uninsured motorists can also foot some of the blame with the AA estimating that accidents involving the uninsured add as much as £30-£60 to a typical premium every year.

According to the Association of British Insurers (ABI), the development of a compensation culture in the UK has also been consequential in the price hike. It believes that lawyers, jokingly nicknamed ‘ambulance chasers’, are often needlessly involved in personal injury claims and a radical shake-up is needed.

Indeed the ABI states that an additional 43p is added to every £1 worth of compensation to cover legal expenses.

Despite the increases however, insurance companies claim that most drivers are fortunate and that the situation could actually be much worse.

Premiums are predicted to rise by a further 15 per cent in the coming years, however, insurers state that the figure would be nearer to 50 per cent were it not for intense competition in the market.

It seems that the only way is up for car insurance premiums, so what can consumers do to keep their costs in check?

Tips to cut your car insurance premiums

Perhaps the most important step in consumers’ efforts to secure cheap car insurance is to take advantage of the competitive marketplace that insurers claim is preventing them from passing on their full expenses. The easiest way to do this is by utilising price comparison websites.

One of the main reasons why car insurers have become so competitive is that price comparison websites return their quotes in a table format, ordered by cheapest quote. As many consumers are motivated by price, the pressure is on for car insurance companies to keep quotes competitive.

It is important too, to remember that there is no such thing as a ‘cheapest insurer’. Every insurance quote is different dependent on variant risk factors – such as where you live, the car you drive and your own experience and record as a driver. That’s why it makes sense to utilise a comparison tool with which you can see a list of quotes from a range of providers, rather than simply approaching one or two insurers directly and asking them for their best deals. Always remember to check the level of cover carefully, as many insurers are offering 'stripped down' policies at a lower premium; what this means is that the level of cover you receive may not suit your needs.

Regardless of whether you use a comparison tool or not, you must shop around online for the best deals. Due to lower overheads and more efficient running costs, it’s less expensive for insurers to carry out their operations online and some of these savings are passed on to consumers in the form of online discounts, which usually range from 10- to 15 per cent.

No matter which insurer you choose, there are several steps you can take to cut your premiums.

These include enhancing the security of your vehicle with approved steering wheel locks, alarms and immobilisers. Parking your car in a garage overnight and improving your own driving record will also be of benefit – the fewer convictions against your name the lower your premiums will be.

Consider taking an advanced driver’s course – a Pass Plus certificate can cut premiums by as much as 35 per cent. Raising your excess (the amount you will pay in the event of an accident) will also reduce your premiums – though you should be careful to only take on an excess at a level you can comfortably afford.

From there, be diligent behind the wheel and remember that the fewer accidents you are involved in, the lower your car insurance premiums will be.