Car insurance costs rise for first time in 18 months
Tue, 26 Apr 2022
- Drivers now paying £550, on average, for their car insurance, following a £12 (two per cent) increase year-on-year.
- About two-fifths (42 per cent) of drivers who received their renewal last quarter saw their prices increase by £39.
- Almost a fifth (19 per cent) of drivers who were due to renew last quarter wrongly believed that their renewal price wouldn’t go up.
Drivers are paying more for their car insurance compared to the previous year for the first time in 18 months, with the average cost now £550.
That figure is £12 (two per cent) more expensive compared to this time in 2021, according to the latest car insurance price index from Confused.com and insurance broker Willis Towers Watson (WTW).
Prices have been creeping up for the past six months, with drivers today paying £36 more than those who bought a new policy six months ago, on average. They have increased by £21 (four per cent) in the past three months alone.
Confused.com suggests the rise is due to the number of cars on the road increasing ever since the easing of Covid-19 lockdown restrictions.
Louise O’Shea, CEO at Confused.com, said: “Just like many of our household bills, car insurance costs are starting to increase, and this is mostly down to the fact that we’re driving a lot more now than we were 12 months ago, and this means the number of claims insurers are paying out on is likely to have increased too.”
Loyal drivers paying more despite FCA changes
Drivers could be paying more by choosing to stick with their renewal price, despite new Financial Conduct Authority (FCA) regulations stipulating that insurers must offer drivers the same price they would receive as a new customer buying in the same way, banning what was previously known as a new customer discount.
Of 2,000 drivers surveyed by Confused.com, two-fifths (42 per cent) of those who received their renewal in the first quarter of 2022 saw their price increase year-on-year, by £39 on average.
The cost of a new policy through Confused.com increased by just £12 in comparison throughout the same period, which means drivers could have saved money by shopping around, despite the rising prices.
In fact, more than a quarter (26 per cent) of those who saw their price increase shopped around and switched insurers, saving £59, on average, Confused.com said.
Following the FCA changes, a fifth (19 per cent) of drivers who received their renewal in the past three months wrongly believed that their renewal wouldn’t increase, with a further fifth (21 per cent) expecting their renewal price to be cheaper.
O’Shea reminded drivers that the recent FCA changes do not guarantee them a cheaper or flat renewal price, as any increases in the average cost of car insurance across the UK will also be reflected in renewal premiums.
She said: “It’s worrying that so many people believed the pricing changes that came into effect in January would guarantee them a cheaper price, and I have no doubt they had quite a shock when they received their renewal notice and it was higher. This is purely down to the fact that the cost of insurance is going up, and this stands for renewal prices too."
How much is car insurance?
The average cost of car insurance in the UK is now £550, according to the latest car insurance price index from Confused.com and insurance broker Willis Towers Watson (WTW).
This is £12 more than in the first quarter of 2021 and Confused.com suggests it is due to more people driving now that Covid-19 restrictions have been removed, meaning the number of claims insurers are paying out on is likely to have increased too.
How much is car insurance for young drivers?
The average premium for first-time 17-year-old drivers is now £1,166 – the lowest on record - according to Confused.com. This is £83 (seven per cent) less compared to drivers of the same age 12 months ago.
Similarly, 18-year-olds shopping around will save £23 (two per cent) compared to 12 months ago, on average. However, this is still the most expensive age for young drivers, with premiums at £1,419, on average.
According to the data, prices fall below £1,000 once drivers reach the age of 24.
Which is the cheapest place in the UK for car insurance?
The price a driver pays for car insurance varies depending on where they live, with some drivers paying more than double what others are paying.
Inner London is the most expensive area in the UK for car insurance, where motorists are now paying £864, following an £18 (two per cent) increase in the past 12 months, on average, according to Confused.com
In contrast, drivers in the Scottish Borders pay £370, despite an £18 (five per cent) increase year-on-year, on average.
Drivers in Northern Ireland have seen the biggest rise in prices in the past 12 months, with the average car insurance premium in the region now £56 (11 per cent) more expensive year-on-year, on average. This means drivers in the region are now paying £581, on average.
When does a no claims bonus expire?
Do I have to accept a car insurance write-off value?
