Car insurance hits £500 a year for average UK driver

Record high motoring insurance is being driven by inflation and vehicle repair costs, the ABI said

Motorists are paying more than ever to insure their vehicles with the industry claiming inflation and a massive rise in vehicle repair costs are to blame.

An analysis of 28 million policies found the average premium in the three months to the end of June was £511, 21% higher than this time last year.

Some motorists have contacted the BBC citing quotes triple the previous year.

The Association of British Insurers (ABI) said sustained cost pressures were behind the record highs.

The industry paid out £2.4bn in all motor insurance claims - covering theft, vehicle repairs, and personal injury - in the first quarter of this year, up 14% from the same period last year, the organisation said.

The cost of vehicle repairs leapt by 33% over the year to £1.5bn, reflecting rising costs, including energy inflation, it added.

One insurer alone quoted a 40% rise in labour rates between June 2022 and January this year, with the cost of many replacement parts increasing by up to 21%, the ABI said.

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For motorists renewing their cover, average policies rose by £36 on the previous quarter to £471, while the average premium for a new policy was up £21 to £566.

The ABI said the distinction reflected the "different risk profile of new and renewing customers". A new customer "may be more likely to be a younger, less experienced driver" it added.

Saga told Ms Cedra inflation and a "massive" number of claims were to blame for a near tripling of her quote

Diane Cedra, 66, from Solihull in the West Midlands paid £211.99 to insure her Peugeot 2008 with Saga last year. When her insurance expired on the 31 July she was quoted almost triple that amount - £620.

With some "tweaks" and a customer loyalty bonus she eventually paid £411 but said the reasons Saga gave her for the increase were inflation and the "massive" number of claims it had to pay out.

"I find it harsh that I might be having to contribute towards people who are having more accidents or are not driving as carefully as I am," she told the BBC.

In Burnley, Karl Kemp was told by Churchill it would cost him £1,653.66 to insure his Range Rover Evoque, up from £925.90 last year, despite no changes in his circumstances.

"There's absolutely no reason it should go up. The only change is I've actually gained a year in no claims, so it should actually drop slightly," he told the BBC

After shopping around First Choice offered him a figure comparable to last year's premium. "If we had to pay an extra £700 on car insurance there was just no way I could have afforded a car."

Karl Kemp said he would not have been able to keep his car had he renewed his premium with Churchill

Consumer group Which? said the record highs in premiums came at "the worst possible time for consumers already battling cost pressures in a number of other areas".

"Motorists may be wondering whether insurers passing on increased costs is justified at this time," the organisation said. "The Financial Conduct Authority's new Consumer Duty will mean insurers need to be able to demonstrate the products they are selling offer fair value."

In June, a report found 2022 was the UK motor insurance market's worst performing year in a decade and that for every £1 motor insurers received in premiums, they paid out £1.10 in claims and costs.

The ABI said its analysis covered the average prices for premiums paid not prices quoted.

How can I get cheaper car insurance?

• Plan ahead: The cheapest time to get quotes is 23 days ahead of your renewal date. The closer that gets, the more expensive the quote - so look into it ahead of time.

• Check comparison sites. As they are technically insurance marketplaces, they're allowed to negotiate their own prices with insurers. Try getting two or more quotes to improve your chances of getting the cheapest deal.

• Make sure you're on the electoral roll: Not being on the register makes it trickier for companies to identify you, so you might receive get a higher quote.

• Try to haggling a discount with your existing insurer. If you don't want to try a new provider, try negotiating directly with your current one.

• Check whether the policy is suitable. There are always add-ons to choose from, such as the option of a courtesy car being included if yours needs to be fixed. Make sure you've picked only the ones that you want.

Source: Money Saving Expert