- 20
- Oct
The burden of car insurance premiums does not look set to lighten any time soon, the AA has warned.
New data from the group has shown that for the third quarter in a row, the typical cost of car cover has rocketed, with a 3.1 per cent rise recorded in the last three months. Such an increase is equivalent of an additional 22 pounds for annual cover. For the average motorist in the UK, annual car insurance will cost a typical 724 pounds and 28 pence, the firm noted.
And while average policies have risen, the AA warned that not even searching around will insulate drivers from car cover inflation. Its Shoparound index - which measures usual premium quotes for those who have compared different providers before committing to a deal - showed that even bargain-hungry drivers can expect to pay an extra ten pounds for their car cover, taking usual annual policy prices to 486 pounds. While this represents a two per cent increase on figures from the previous quarter, it also marks an 8.7 per cent rise when compared to prices last year, equivalent to 39 pounds.
In being exposed to escalating car insurance costs - in addition to an increased fuel burden - consumers could find their ability to keep up with other financial commitments is compromised. Such areas could range from personal loans to heating bills.
The AA pointed out that trying to cut back on cover in an effort to reduce motoring costs will also bring less rewards than in the past. According to the group, typical quotes for third-party, fire and theft cover are 11.6 per cent higher than they were a year ago. Such a rise amounts to a hike of 62 pounds and brings typical minimum cover to 591 pounds.
Commenting on the statistics, Simon Douglas, director of AA Insurance, said: “Despite these rises the car insurance industry continues to make an underwriting loss: for every 100 pounds taken in premiums, more than 105 pounds is paid in claims. Insurers are particularly concerned about increasing legal costs and personal injury claims which last year rose by 22 per cent.”
He added that young male drivers are a particular drain on the industry as a whole, although they also pay the highest premiums.
“The average car accident insurance claim for a young male driver is nearly 4,500 pounds compared with 2,700 pounds for their female peers. For drivers aged over 30, the average claim is 1,400 pounds for men and 1,200 pounds for women. The withdrawal of another insurer from this arena suggests that companies are carefully looking at their costs,” he claimed, referring to Allianz recent departure from the market.
For those who are looking to buy a smaller car in a lower insurance bracket, taking out a car loan may prove a cost-effective way of raising the cash. Meanwhile, whether buying a new motor with a car loan or cash, Sainsburys Bank has noted that failing to haggle over forecourt prices could end up knocking drivers finances back into first gear.
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