Skip to main content

ABI reports rising cost of repairs hitting motorists at renewal time

The average cost of car insurance rose by £5 in the second quarter of the year, insurers said.

The Association of British Insurers (ABI) has revealed that the price paid for the average policy is now £419, up 1.3% from the first three months of the year. However, the average price is still £11 lower than the same period in 2021.

The data also shows that the cost of new policies has risen more sharply than the cost of renewals, after the Financial Conduct Authority introduced new rules to prevent renewing customers from being overcharged.

The cost of spare parts and repair work is rising

Average premiums for new policies were £500 and average premiums for renewed policies increased to £371.

Unlike other quote-based estimates, the ABI figures track the price of policies actually purchased by motorists to create an accurate picture of costs across the country.

Callum Tanner, ABI Director, General Insurance, said: “Insurers understand that these are difficult times for many households faced with the rising cost of living.

“While, like many other sectors, auto insurers themselves face higher cost pressures, which are becoming increasingly difficult to absorb, they will continue to do everything possible to maintain auto insurance at prices as competitive as possible.”

The ABI said more than 18 months of rising costs in the used car market have contributed to higher costs for insurers. Repairers have also faced the same shortage of semiconductors that affects the entire automotive industry, and the cost of raw materials, such as paint, has also increased. The increasingly high-tech nature of cars and the time and components needed to repair them are also driving up the cost of insurance claims.

How to lower your car insurance costs

With policy costs rising in the current cost of living crisis, a few simple steps can help you save money on your car insurance.

  • Shop around: Although the costs of new policies increase faster than renewals, everyone’s circumstances are different, so it’s always beneficial to compare quotes before committing to a policy.
  • Pay upfront: In most cases, you can choose to pay your premium in one installment or spread the cost over a year. Usually there is an additional cost for paying in installments, so pay the entire bill up front if you can.
  • Check your mileage and usage limits: the distance you drive each year affects how much you pay and, especially after Covid, many of us aren’t driving as far as before, so check if you can . Also, if you’re not using your car to get to work, deselecting the in-use transportation option could help cut costs.
  • Cut the extras: Insurers will always try to persuade you to include extra cover for things like lost keys, courtesy cars and breakdown cover. This all adds up to your premium, so consider whether you need it or can get services like breakdown insurance cheaper elsewhere.
  • Increase your deductible: A higher voluntary deductible often reduces the cost of the premium. Just make sure you can afford the extra cost if you have to claim.
  • Adding a Named Driver: Sometimes, especially for young drivers, adding another more experienced motorist to your policy can actually cut costs, so it’s worth considering. On the other hand, young, inexperienced drivers or those with automotive convictions will drive up the cost, so don’t add them on if you can avoid it.
  • Change jobs. Some jobs have higher costs than others and while you can’t lie about your job, you can be smart with the title or description you use to get a better quote.
  • Consider telematics: Telematics or black box insurance plans use a tracking device in the car to monitor your driving behavior. It all sounds a bit Big Brother but, especially for young drivers, can bring lower premiums.
Source link