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London drivers hit with £1,000 insurance bills for first time

london traffic
london traffic

Drivers are facing the biggest annual increase in car insurance premiums for five years with the average policy in central London approaching £1,000 for the first time.

Comparison site Confused.com found the average cost for insurance had risen 14pc in the past 12 months to £588 a year, including a £32 rise in the last three months alone.

Huge Griffiths of Carwow, a motor dealer, said the rise was a rebound from the Covid lockdowns when premiums fell to their lowest in seven years.

"A scarcity of replacement vehicle components linked to the global semiconductor shortage means repairs are often more time-consuming and expensive", he added.

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"Rising energy prices make raw materials such as paint pricier to produce. These supply-chain squeezes will, inevitably, be handed down to drivers come renewal time."

Despite new rules coming into force requiring insurers to make pricing fairer to customers at renewal, the research also found this was not necessarily always the case.

More than two in five drivers who received a renewal quote in the last three months said they saw an increase of £38, on average.

By contrast, those who shopped around after their insurance expired found deals up to £50 cheaper, prompting City watchdog the Financial Conduct Authority to encourage drivers to actively seek out better deals rather than renew with their existing provider.

Earlier this year, changes made by the FCA stopped providers from "price walking", a form of loyalty penalty in which insurers charge higher prices to existing customers compared to new ones.

However, the changes have made drivers less likely to switch deals, Confused.com found, despite evidence that doing so could end up being up to £50 cheaper.

More than 40pc of 2,000 drivers surveyed by the comparison site said they were offered more expensive quotes by their existing provider.

Drivers in central London were stung by the biggest increase in fees, with premiums shooting up to £936 on average – an annual increase of £132. The average cost in Northern Ireland also soared by 20pc.

Younger drivers were hit by the biggest rises, with those aged 19 paying £1,488 on average – a rise of 19pc compared to last year.

Louise O’Shea, of Confused.com, urged drivers to shop around for better deals, rather than rely on a cheaper rate from their existing provider.

“The pace at which car insurance is rising will be a real worry for many,” she said.

“The latest figures reveal a true example of how volatile the market currently is, which is why I need to stress just how important it is to shop around when it comes to renewing any insurance policy.”