Car insurance: quotes rise as ABI reports £157 increase in first quarter of 2024 - cheap car insurance UK tips

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The average cost of comprehensive motor insurance rose by approximately a third (33%) or £157 in the first quarter of this year compared to the same period last year, according to data released by the Association of British Insurers (ABI).

The ABI's analysis of policy sales revealed that the typical premium paid in Q1 2024 amounted to £635, reflecting a 1% uptick from the preceding quarter.

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For context, in the first quarter of 2023, the average premium for private comprehensive motor insurance stood at £478. The ABI noted that the 1% quarterly increase suggests a slight alleviation from the rises witnessed in 2023.

It said insurers are absorbing escalating costs, as evidenced by an 8% spike in the average claim payout, reaching a historic high of £4,800 during the same timeframe.

Claims inflation is yet to stabilise, with the costs of repairs, replacement vehicles and theft all rising, the ABI said. The ABI’s motor insurance tracker analyses nearly 28 million policies sold a year and the claims paid against policies.

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The association has previously cited costs such as energy inflation, rising prices for paint and other raw materials, rising courtesy car costs and the increased cost of second-hand cars as adding to overall cost pressures.

Over the longer term, motor insurance has tracked very close to inflation, the association said. In real terms, prices are £8 or 1.3% higher when compared to a previous peak at the end of 2017, according to the ABI.

This is partly because prices fell significantly during the coronavirus pandemic, it said. It added that 2023 was a “difficult year” for motor insurance margins, and that since 2017, costs for insurers to pay claims have increased by 23% in real terms.

Mervyn Skeet, the ABI’s director of general insurance policy, said: “We understand that car insurance costs are putting pressure on household finances. These figures show how competitive the motor market is, with insurers absorbing significant cost rises but keeping prices relatively stable.

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“Even though these figures demonstrate a slowdown in price increases, we won’t be taking our foot off the gas when it comes to our work on tackling the cost of cover.”

The ABI previously set out steps that the industry is taking to combat the rise in the cost of motor insurance in February. Last week it announced that its members had agreed to a set of aims at helping to manage the costs for people paying for insurance on a monthly basis.

The association said it recommends that anyone struggling with the cost of their cover speaks to their insurer.

Earlier in April, Treasury Committee member Dame Angela Eagle told a hearing into insurance: “My constituents and many people who write to the committee feel that insurance is becoming more of a rip-off.

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“Because the price is going up, it’s harder to make a claim; people, when they do make a claim, often have to wait a very long time or aren’t dealt with very fairly.And that’s particularly the case for insurance that’s compulsory, such as driving insurance.”

In another Treasury Committee session later that day, Charlotte Clark, director of regulation at the Association of British Insurers (ABI), told the committee that part of the reason that rises in motor insurance may look so significant is that “it’s coming off the back of the pandemic, where motor insurance in particular was reduced quite significantly, because the risks of being in a car accident when you’re at home are quite low”.

Matt Brewis, director of insurance at the Financial Conduct Authority (FCA), told the committee the regulator has been looking at evidence of how inflation has impacted the motor sector.

He said the regulator is meeting with price comparison websites, brokers and consumers “to understand the concerns of consumers and where they are seeing issues”.

Tips and tricks to help you get the best deal on your car insurance

Shop around

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One of the greatest tools at the fingertips of motorists is being able to shop around for car insurance from the comfort of your own home. There are all manner of comparison sites to use and they’ll all give you prices for cover from a variety of different providers.

A lot of these services allow you to tweak and change your policy details – such as your intended mileage – to see how it affects the amount you’ll pay.

Don’t allow your insurance to auto-renew

Many car insurance policies have an auto-renew facility. With this, your premium will auto-renew when it comes to the end of your policy. While this may sound handy, it often means that you’ll be paying more for cover because you’ve allowed it to roll over automatically.

Therefore, if your policy is coming to an end, make sure you shop around beforehand to make sure you’re getting the best deal. Of course, if your auto-renew price is the cheapest then you can let it roll over, but on most occasions, you’ll pay lower prices if you check out other policies first.

See if adding a responsible driver lowers your premium

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A lot of insurance cover is based on risk and having an older, more experienced motorist on your policy as a named driver can help reduce costs. It can also go the other way – increasing your premiums – so make sure you test it out via a comparison site first.

Remember, that you still need to be the main driver. If it’s found that the ‘named driver’ on your policy is actually using your car most of all, then you could find your policy being cancelled. This action is known as ‘fronting’ and can also see insurers not paying out in the event of an accident.

Pay annually if you can

Car insurance represents a big financial undertaking – particularly for younger drivers – and insurers do offer better prices for those motorists who are able to pay in full. Though you can spread the cost of your cover via monthly payments, you’ll spend less overall if you’re able to pay for it in one go.

Of course, if you’re not able to pay up front – and if it could add extra financial strain – then go for the monthly payment option.

Make sure your mileage is accurate

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Insurers use your estimated mileage to determine how much you’ll be driving. After all, the more miles you drive, the greater chance there is that an accident could occur. So make sure you’re accurately putting down your mileage. Consider how far you drive on a day-to-day basis and factor in any longer trips that you might have planned.

Don’t be tempted to go low with your mileage, however, as if an insurer found that you were travelling a lot further than you’d stated on your policy then you could find your cover being voided.

If you’re insuring more than one car, take a look at a multi-car policy

It’s common these days for one household to have multiple vehicles and, if this is the case, you might find it to be more cost-effective to get a multi-car policy. These types of insurance offer a discount for covering more than one vehicle so it might prove a bit cheaper than covering each car individually.

However, it can go the other way too and make things more expensive, so make sure you get a number of quotes together before signing up.

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