There is more bad news on the way for motorists. According to the AA, car insurance premiums have risen by a shocking 40% in the last 12 months.
The AA British Insurance Premium Index estimates that the typical premium for a comprehensive car insurance policy, even for those who shop around, is now £892.
However, drivers aged 17 to 22 have again taken the brunt of the increases as they now pay a typical premium of £2,431 - more than 64% higher than 12 months ago.
The index showed that premiums for third party, fire and theft (TPFT) increased to £1,532.62, some 82% higher than 12 months ago.
The index, which records the fluctuation of premiums for 2,800 car insurance customers across the UK, cites increasing fraud and injury claims as the primary reasons behind the increase.
Why the rise?
Car insurance premiums have been increasing for some time — but despite the sharp rise in premiums, insurers are still operating at a loss.
"Insurers have been running an unsustainable business for years," said Ian Crowder of the AA. "The cost of claims has exceeded premiums by 22%, so for every £100 claimed, insurers were paying £122."
The record amount of money drivers are paying for fuel is another reason driving is becoming more and more unaffordable.
"This is leading to more people withholding information when taking out a policy or exaggerating personal injury claims to try and reduce their costs. But this simply piles on costs for insurers and results in yet higher premiums for honest motorists," said Simon Douglas, director of the AA.
Could save money on car cover — compare prices now and get £20 cashback if you switch with Yahoo!
Are you overpaying?
Research from Swiftcover.com indicates that households with more than one car could be paying as much as 29% over the odds for their insurance by purchasing multi-car policies.
Multi-car insurance policies enable you to insure more than one vehicle in a single policy. However, single policies may benefit you more if you have more than one car in your household.
It has generally been accepted that the more cars you have on your policy, the lower price you will pay. Some insurers claim to offer discounts of up to 30% on multi car policies.
Sarah Vaughan, motor director at swiftcover.com said: "It's easy to assume that multi-car discounts must offer the best value, but it's clearly not the case for everyone. It may be slightly easier but is it really worth paying hundreds of pounds over the odds?"
See if you're overpaying for car insurance
More pain to come
From December 2012, insurers can no longer take gender into account as a risk factor when calculating the cost of insurance premiums — a move that will turn the insurance industry on its head.
The ruling will mean insurers will have to radically transform the various insurance policies are priced.
The Association of British Insurers (ABI) estimates that women under the age of 25 could see an average rise of 25% to their annual premium.
Cut the cost of your premiums
Although the cost of premiums is getting out of hand, there are a number of ways that can help reduce the amount you pay.
- Not buying vehicles with powerful engines. Statistically these kinds of cars are more likely to be involved in an accident.
- Adding security features to your car such as alarms and steering locks.
- Keeping your car in a garage to reduce the risk of theft.
- Adding an experienced older driver to your policy if you are under 25. However, you should never falsely name someone else as the main driver as this is considered fraud.
- Getting a range of quotes when looking for a new supplier.
- Paying for your insurance in a lump sum, rather than monthly instalments.
There are no comments yet