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Why has the cost of my insurance increased so much?
We recently bought a 2008 Volvo V50 SE Lux as a replacement for my wife’s 1997 Volvo S70 CD. The new car has a 2.4i petrol engine, whereas the old one had a 2.5 turbo petrol engine. I spent many hours visiting comparison websites and speaking to a number of different insurers and received quotations of between £499 (which I eventually accepted) and £850. Please can you explain why the premium should increase by 150 per cent for a less powerful car of the same make, albeit some 11 years younger, since I am totally mystified. My wife has a clean driving record, with no convictions or claims over a period of more than five years, and I am the second named driver with the same clean record. My wife is 82 and I'm 78.
Asked on 4 April 2017 by Brian Dotchon
Answered by
Honest John
The reason the insurance has increased is more to do with the financial markets than your car. Insurer's make profit by investing the money you pay as a premium into investment markets, they actually make very little underwriting profit. Unfortunately, the financial markets are offering very very low returns at the moment (look at your own current account or investments for example), due to this, they have increased premiums across the board. Expect further increase's year on year for at last the next few, as the Ogden rate (this is the rate that is used to calculate compensation for those with permanent debilitating injuries after motor accidents) has been reduced from 2.5 per cent to -0.5 per cent. It is explained further here: www.honestjohn.co.uk/news/miscellaneous/2017-02/in.../
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