You could be paying almost £60 more for your car insurance premiums than you were doing three months ago, according to figures from an AA report.
AA’s quarterly British Insurance Premium Index found that car insurance premiums increased by 10 per cent in the final quarter of 2015. The average price for comprehensive car insurance is now £625.70, an increase of £59 in three months.
The latest increase in the price of car insurance premiums comes after a particularly expensive year for motor insurance – so let’s find out why that is.
Up 20% in a year
According to the AA, the main reason for the sudden increase in car insurance premiums is the Insurance Premium Tax (IPT) that came into force from November 2015. This tax hike meant that the tax on general insurance premiums was increased from 6% to 9.5%, causing prices to rise.
Another reason why car insurance premiums rose so sharply was the number of people making ‘false or exaggerated’ personal injury claims. This doesn’t mean people who had an accident and were genuinely injured – instead those who had a collision in their car and didn’t have any injury but made a claim on their insurance for an injury anyway. The Association of British Insurers estimates that fraudulent personal injury claims add £50 to the cost of every car insurance policy.
Over 2015 as a whole, the cost of car insurance premiums rose 20 per cent when compared to 2014, representing an increase of more than £100. The 10% increase in car insurance premiums in the last quarter of 2015 made it the biggest quarterly rise since 2010.
How to save
You don’t just have to accept the average increase in car insurance premiums – switching to a better deal could see you spending less. The majority of the best car insurance deals are usually offered to encourage new customers to switch, so it might be worth looking at what other insurers can offer you if your policy is coming up for renewal. You could use a price comparison site like Comparethemarket.com to find the best deals available from all of the high street insurers. Don’t forget to manually check the insurers who don’t appear on price comparison sites either – such as Direct Line and Aviva.
Another way you could cut how much you’re spending on car insurance premiums is voluntarily increasing your excess – the amount that you’ll personally have to pay out if you make a claim. The higher your excess is, the less the insurer would have to pay out if you had an accident so they’re likely to view you as less of a risk. However, be sure not to set this too high as your excess could end up being higher than your car’s value, meaning it will never be worth making a claim.
For more ways to save on your car insurance premiums, check out our blog for the best money-saving tips.