Motorists are hit by serious hike in cost of car insurance
Drivers encouraged to shop around for best deals
DRIVERS across the UK have been hit hard by bumper increases in the cost of car insurance.
The average premium for comprehensive motor insurance rose by 19 per cent, or £115, over the past year to £715, the biggest annual price hike for five years, according to figures from comparison website Confused.com.
Motorists in Scotland did not escape. Drivers in the Hebrides suffered the biggest annual increase since 2006 at 42 per cent. The average premium in the Hebrides is now £638, a yearly rise of £189. Across the Scottish Highlands and Islands prices went up by 24 per cent, pushing the average premium to £533.
The cost of car insurance in the Scottish Borders jumped by 21 per cent, or £84, to £479. Drivers in Central Scotland will also feel the pinch after a 19 per cent premium hike to £568. In East and North East Scotland premiums rose by 18 per cent to an average of £508.
Insurance companies blame the price rises on an increase in tax, claims and repair costs.
Selwyn Fernandes, managing director, LV= General Insurance (Direct), says: “There has been a prolonged period of intense price competition among insurers following the 2012 regulatory changes reducing personal injury legal costs, and this has benefited consumers. However a number of factors, such as the 3.5 per cent Insurance Premium Tax (IPT) changes, the increasing claims costs from higher accident frequency and more expensive repair costs for newer vehicles, have meant that insurers have been forced to increase prices over the last 12 months.”
Insurers take a number of factors into account when setting premiums, including your age, occupation and address. Of course, you can’t move home, or change your job to get a better deal on your car insurance and you should always tell the truth on your insurance application. Any false information could invalidate the cover and the policy would not pay out in the event of a claim.
However, nearly one fifth (18 per cent) of Britain’s drivers tweak their details to obtain cheaper cover, according to Kwik Fit Insurance Services, potentially leaving almost seven million drivers with invalid insurance.
Drivers are most likely to “tweak” annual mileage (45 per cent), followed by overnight vehicle location (44 per cent).
Stewart Barnett, head of marketing and ecommerce at Kwik Fit Insurance Services, says: “When it comes to insurance, small changes can make a big difference and, in some cases, inaccurate facts could invalidate claims and policies. We are certainly not looking to scold people, but we do want to stress the link between giving false information and the impact on invalidating insurance policies, which could cost dearly.”
But you don’t have to lie on your application to save money.
Here are The Herald’s top tips to drive down the cost of cover:
‘‘ Small changes can make a big difference and, in some cases, inaccurate facts could invalidate policies
Compare quotes Kevin Pratt, insurance expert at MoneySupermarket, says: “Our stats show that over half of drivers could save £250. You’re likely to get the biggest savings if you’ve been with the same insurer for a number of years. You’ll probably find that your premium has edged up at each renewal, leaving you paying a hefty amount more than you could pay by moving your business elsewhere.”
The Financial Conduct Authority (FCA) wants more people to shop around for motor insurance and has published proposals to force insurers to give details of last year’s premium when they send out renewal offers. In a trial by the FCA, the inclusion of last year’s premium on renewal notices prompted up to 18 per cent more people to switch insurer. Increase the excess The excess is the amount you pay towards any claim – and all motor insurance policies come with a compulsory excess. So, if the excess if £100 and the claim is £500, the insurer will pay out only £400. If you can afford to pay a higher voluntary excess, you can usually negotiate a lower premium. Stick to the rules of the road Motorists with convictions pay a much higher price for car insurance than other drivers. It makes financial sense to drive carefully and obey the rules of the road. Don’t claim Most insurers reward drivers who don’t make claims with a no claims discount. The size of the discounts varies but can be as much as 30 per cent for one claim-free year up to more than 60per cent for five consecutive claim-free years.
It can therefore be a good idea to pay for any minor damage out of your own pocket in order to preserve your no claims discount. Drive fewer miles The more you drive, the more likely you are to make a claim, so you think about limiting your annual mileage in return for a lower premium. You should also consider restricting the use of your car to “social, domestic and pleasure” because business drivers generally pay higher premiums. Keep your car secure Insurers sometimes offer discounts if you fit approved alarms or immobilisers to your vehicle. You will also typically pay less for cover if you keep your car in a locked garage overnight, rather than on the street. Pay up front You can usually pay for cover in monthly instalments, but it’s often more expensive because the firm will add an admin fee.