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Rising Insurance Costs see Motorists pay out over 18% more

Over the past year, motorists have seen a rise of over 18% on the cost of their insurance. This is seen as an average of £132 rise over the year. This means the average insurance premium is around £847 paid by drivers. In the past three months alone (April-June), there has been an 8% rise.

So, why has this rise occurred so dramatically?

car insurance

The cause of the rise

The blame for the rises has been laid at the feet of the compensation rule change regarding personal injury and the increase in the insurance premium tax.

The rise in the insurance premium tax came into effect on 1st June. It rose from 10% to 12% and applies to 50m cars. This tax has doubled since 2015, thereby causing additional cost to drivers.

The change in the compensation rule was the government’s decision to cut the discount rate used to calculate compensation payments when people suffer serious injuries in a car crash. Insurers have claimed this will over-compensate those in car accidents and therefore have spread the cost of the change across everyone’s insurance premiums. This means that if you are never in a car accident at all in your life, you may feel that you have been over charged. However, if you are unfortunately in a car accident, the compensation will be well received.

These changes have dramatically contributed to the rise in insurance costs.

Who is most affected by the rise?

Some outlets have claimed that percentage wise, it is the only 65s who will be most affected by these changes. However, it is the young drivers who are still carrying to the brunt of the price increase.

The average driver over 65 pays £551 a year for insurance. The average seventeen-year-old driver pays more than four times that a year. An eighteen-year-old driver pays the most with their average insurance costing close to £2,334 and nineteen-year-olds have seen their insurance costs rise by an average of £202 (10%) in the second quarter of this year alone.

Compared with last year, twenty-one-year-old drivers saw the biggest annual increase with their insurance rising by 21% on average (£315). The young are again being priced out of the car market.

Difference in the regions

All the regions in the country have seen their insurance prices rise, but some more than others. East, South and West of England are all paying their highest premiums yet, whilst the Border regions of Scotland have seen their highest annual rise in car insurance. These increases are expected to continue in the years to come and drivers are advised to keep an eye out for any more drastic changes.

Shop around!

With the constant rises in insurance costs, reaching the highest they will ever be, it is the best bet to shop around. It is advised that drivers begin to shop around more when it comes to renewing their insurance.

Telematics Insurance could help

With the price of insurance on the rise, there is one way to temper those eye-watering quotes. Telematics insurance from Autosaint offers cheaper insurance if you agree to have a telematics box installed in your car.

The installation of the black box (size of your smartphone) allows the insurance company to record speed, distance travelled and what times of day or night you are on the road. They will create a profile of your driving style, also including braking and cornering. The safer you take the corners and the lighter you brake, the better score you will receive. The better score you earn, the lower your insurance should cost. It might be something to consider.

Insurers will be trying to outbid each other, whilst still offering higher insurance costs. You can easily find the cheapest insurance option, but do expect it to be higher than you are paying now. This is the sad fact over the increase in insurance.

If you are looking for a new car that has a low insurance cost than what you are currently driving, Hippo Motor Finance can help. We have a huge range of cars available for you to consider. All you need to do is enquire with us by telling us your monthly budget. Our dedicated team will find you the right car and the best deal in one easy car finance package.

Representative Example of Credit

We expect more than 51% of our customers to achieve this rate.

Loan AmountTotal Cost of CreditRepresentative APR48 Monthly PaymentsDeposit AmountLoan TermTotal Amount Payable
£7,500£3019.1619.1% APR£219.77£048 Months£10,519.16

We are a broker not a lender and our registered office is Trident Park, Trident Way, Blackburn BB1 3NU. Our contact number is 01254 919000

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