Cost of car insurance rockets upwards

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by: bythesea
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Date: Mon, 30 Aug 2010 Time: 12:17 PM
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Car insurance premiums soared in the second quarter of 2010 after insurers passed the cost of a torrid year on to beleaguered consumers. The Confused.com/EMB Car Insurance Price Index showed that the average cost of comprehensive car insurance rose by 14.2 per cent between April and June, meaning a huge annual increase of 31 per cent.

The rise was put down to drastic losses from insurers, whose 2009 financial results showed an average of £122 in costs for every £100 of premium received. Because of this, the average cost of a comprehensive policy was £599 in the second quarter of the year - a £74 increase on the first three months of the year.

Confused.com product director Simon Lamble said: "This is a massive blow for motorists who have already suffered at the hands of petrol price hikes and insurance premium tax increases, and unfortunately we do not think we've seen the worst of it."

While the last year has clearly hit drivers' pockets hard, EMB partner Peter Lee agrees that further pain is on the way.

"We would anticipate more gradual rises in the remaining two quarters of 2010 but insurers should still be looking to achieve additional increases over the year," he said.

Lee continued: "As well as making up for current deficits in prices, insurers are suffering from continuing third party injury claims inflation and it is also likely that premium increases will affect the demand for ancillary products."

The hardest hit

Drivers in the 41-55 age bracket were hit the hardest this quarter, largely down to sharp increases in the cost of adding their children to the policy. Women in this age bracket actually saw below-average increases of 10 to 11 per cent over the period, though this shot up a further 14 per cent when they bought a policy that also covered non-spouses.

This eye-watering rise highlights the additional cost of simply adding children to a policy on a ‘just in case' basis - something parents might really want to consider carefully in the current climate if budgets are tight.

Residents of Manchester and Merseyside saw the largest quarterly increase, though this followed some of the lowest price rises in the previous quarter. By postcode, those living in Bradford, East London and Ilford suffered the biggest jumps in comprehensive prices - all in excess of 20 per cent.

Which car costs the most to insure?

This most recent data looks for the first time at which car types suffered the biggest price rises, and if you're the owner of a 3-door hatchback you might want to look away now.

According to our figures, owners of this type of car have seen their premiums increase by a massive 34 per cent over the last year.

Remarkably, that makes them more expensive to insure on average than a convertible, and the second most expensive car type behind a coupe.

Top tips to cut the cost of insurance

At a time when the price of insurance is rising so rapidly, it's important to do what you can to drive that cost down. Here are some top tips that could really help you save:

* Get discounts on your premium by taking extra safety precautions such as fitting an alarm and immobiliser.
* Choose a car with a smaller engine, as bigger and faster vehicles cost more to insure.
* Avoid vehicles with any modifications from the standard manufacture.
* Make savings by reducing your mileage or by only driving at certain hours of the day.
* Take the Pass Plus qualification to benefit from a reduction of up to a third on your premium.
* Consider lowering the price you pay by opting for a higher excess - but be sure you can still afford this amount in the event of a claim.

About the Author

* Compare car insurance with Confused.com - between January and June 2010, 10 per cent of car insurance customers that gave a best alternative price saved over £188.85 by the confused.com website.