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Cost of car insurance up more than 30%

15-10-2010

According to the latest car insurance price index (CIPI) from EMB, the consultancy, and Confused.com, the average car insurance premium has risen to around £650 per year.

Bearing in mind that the figures can never truly be 100% accurate, this equates to a massive jump of between 35 and 37 percent over the past twelve months! Figures released by the AA suggest they saw premiums for comprehensive car cover rise to a national average of £778.13 and that premiums had risen faster than any other time this decade.

Why is that? 

No matter how you look at the numbers, rising underwriting losses costs at the insurer are to blame. Comparison sites like moneysupermarket.com, comparethemarket.com and even confused.com cannot hide the fact that you will be paying more for your cover than in recent years. You can shop around, obviously, as I have just done; like me, you will probably still have to pay more than last year. 

An article in the Telegraph quoted the AA as saying that car theft, insurance fraud, personal injury claims and a rise in legal expenses are all contributing to the increasing costs we have to bear. Personal injury claims seem to be a big culprit here with a reported £66 for every car insurance policy being sold going towards these claims! 

So who is being hit the hardest? 

Younger drivers, of course, are those who face the greatest hikes. Specifically, young male drivers, who have seen a staggering 10% increase in premiums over just the past 4 months. It is estimated that this group are looking at paying around £960 for third party, fire and theft insurance - more than £200 pounds more than they would have paid in January 2010 for the same policy. 
Who is to blame? 

As long as claims fraud increases along with those for compensation against personal injuries, we are, it seems, at the mercy of the insurance industry. This inevitably means higher prices. The insurance companies actually make precious little profit margin on motor insurance as a whole, and honest drivers are paying to cover the often fine line between profit and loss. Darren Black of Confused.com is reported to have said: "The National Fraud Authority suggests that dishonest insurance claims cost around £2 billion a year." Staggering, isn’t it. 

What can be done about it? 

The fact is that men have more expensive accidents than women: a dent is simply cheaper to fix than a high speed motorway accident (sweeping generalisations notwithstanding) and so women get better premiums than us men. That will most likely never change! You could save money by adding your spouse to your car insurance if you are a man; this should help, but whatever you do, think twice about fronting. 

Fronting is when parents insure themselves on their offspring’s cars and add the teenagers as named drivers. Insurers do know about this practice and warn against it, so take heed! It is dishonest and fraudulent, and you may find your insurer refusing to pay for an accident in the event of a serious accident. This will cost you more than you should have to bear in such a situation. 

Changing from fully comprehensive car insurance to third party, fire and theft (TPFT) cover may still help save a few pounds, but drivers buying TPFT policies have also seen a hefty 10% increase over the past year. 

How to save a few pounds on your renewal... 

Here is the tip of the year for you. Wait for your car insurance renewal to come in the mail. Then go online and use a comparison site to get your best price, vary the mileage so that you are not paying for miles you don’t drive. Increase the excess you are responsible for and pick a policy without breakdown insurance. (If you buy your breakdown insurance direct from the AA or Green Flag, that could save you up to £20).
 
Next, call your insurer and suggest that you are not keen to renew until they have a go at matching their price closer to those you have found elsewhere.

This article can be found at www.insurance4britain.com/car-insurance/beating-car-insurance-renewal-quotes.html and is not intended to be advice in any way.