>
Drivers pay 11 per cent more for new car insurance, bringing the average annual premium to £500, according to figures from insurers.
Motorists who joined a new insurer paid 11 percent more in 2022 than in 2021, according to the Association of British Insurers (ABI).
However, drivers renewing existing policies paid 7 per cent less, or an average of £392.
Premiums for drivers are rising because insurers pass on their own cost increases to struggling drivers
That’s because of rules from the Financial Conduct Authority’s regulator in January 2022 that banned “price walking” – the practice of insurers charging innovative customers more than new ones.
This led to decreasing premiums for renewing customers and higher premiums for new customers.
But overall, the most current figures for the last three months of 2022 show an 8 percent increase in average auto insurance premiums.
Jonathan Fong, senior general insurance policy advisor at ABI, said: ‘Every motorist wants the best insurance deal, especially when faced with cost of living pressures, and insurers continue to do everything they can to keep motor insurance as competitive as possible.
“Yet, insurers, like many other industries, continue to be confronted with higher costs, such as more expensive raw materials, which are increasingly difficult to absorb.”
Why are car insurance premiums rising?
This happens for several reasons. The main one is that insurers’ own costs are rising.
For example, rising utility bills mean insurers pay an extra £71.75 to repair every car after an accident. The cost of paint and materials is up nearly 16 percent, the price of replacement cars is up 30 percent, and about 40 percent of all repair work is delayed.
Another part of the rise in car insurance prices is the return of the UK pre-pandemic standards.
During the worst of the Coronavirus lockdowns, auto insurance prices fell as insurers paid fewer claims for fewer trips.
The UK’s return to a pre-Covid way of life has led to more car journeys, more theft and accidents and therefore higher premiums.
How to save money on auto insurance
There are several ways drivers can help lower their insurance bills.
If you can’t afford the insurance at all, it’s best to talk to your insurer.
Fong of the ABI added: “Anyone concerned about being able to continue paying their car insurance premium should talk to their insurer about any alternative payment options that may be available.”
Otherwise, here are five ways to lower car insurance costs.
1. Look around for the best policies
This is the best way to save on car insurance. Drivers can save hundreds of dollars if they shop around when renewing their coverage.
Insurers are not allowed to charge renewing customers more than new customers. That means that if a driver renews, they should be quoted the same – or less – than if they had started a new policy with the same insurer.
But it may still be possible to get a better deal by shopping around.
Insurers say the cost of repairing damaged cars is skyrocketing and should be passed on to drivers
2. Consider black box telematics insurance
Black box policies are where the insurer uses a system in your car to track your driving, either a separate device or using the driver’s smartphone. These are designed to reward those who drive carefully.
They can significantly reduce premiums once you start proving you are a good driver. Some insurers even give a discount in advance if you take out a telematics policy.
3. Pay attention to how many drivers are mentioned
Another way to lower premiums is to ensure that only regular drivers are named on the policy.
Adding a young, inexperienced driver can be a false savings, especially if you have a large or more powerful vehicle.
The premium is influenced by the youngest driver and may not have a no claims discount.
4. Pay annually, not monthly
When taking out a new policy, drivers are given the choice to pay for the whole year in advance or in monthly installments.
Many opt for the monthly payments because it means you don’t have to part with a large sum of money all at once, but if you can afford to pay your annual premium up front, you can save money.
Your insurer may charge you interest on the monthly installments. It’s worth asking them if there’s a difference and if so, what it is.
5. Only pay for what you need
Some car insurance policies offer extra benefits, such as a replacement car, windscreen cover, breakdown cover and legal assistance for motor vehicles.
All of these can certainly come in handy, but they will almost always increase the overall cost of insuring your car.
Many consumers who purchase additional insurance then forget they have it, and some deals are only claimed once every 664 years.
Some links in this article may be affiliate links. If you click on it, we may earn a small commission. That helps us fund This Is Money and use it for free. We do not write articles to promote products. We do not allow any commercial relationship to compromise our editorial independence.