Understanding the Recent Increase in Car Insurance Premiums
If you've noticed your car insurance premium has increased without explanation recently, you're not alone. The latest Consumer Intelligence report is showing a 61% increase in car insurance premiums year on year, leaving many drivers wondering what's behind it and what they can do to beat the increase. This blog will look to shed light on factors that are contributing to the surge in car insurance premiums and give tips on how to manage these rising costs.
Like many other goods and services, the cost of living is steadily increasing due to inflation. Rising energy bills, the higher cost of paint and materials and increased cost of providing a courtesy car have all added to the cost of repairs, which have increased by 33 per cent, according to the Association of British Insurers.
Rising repair costs
One of the key factors driving the increase in car insurance premiums is the rising cost of repairs. Modern cars, as well as electric vehicles, come equipped with advanced technology which makes them more expensive to repair. Parts, labour, and diagnostic tools required for these repairs have all become pricier. As a result, insurance companies pass these costs on to policyholders.
Climate change has led to an increase in extreme weather events, which can result in more accidents and insurance claims. Floods, hurricanes, wildfires, and other natural disasters have become more frequent, causing significant damage to vehicles. Insurers are paying out more for claims related to these events, impacting insurance premiums.
Insurance fraud is another major contributor to the increase in premiums. Some individuals submit fraudulent claims or exaggerate the extent of damage to their vehicles to receive larger payouts. To combat this, insurance companies invest in anti-fraud measures, which, in turn along with increased claims, affects premiums for all policyholders.
What Can You Do to Manage Rising Premiums?
Don't be complacent with your current insurer. Different insurance companies have varying pricing models and discounts. Shopping around and comparing quotes can help you find more affordable coverage.
Consider bundling your car insurance with other policies such as home or multi-car insurance. This often leads to discounts that can reduce your overall premium costs. Adding named drivers to your policy can also reduce your premium if there are others in your home who also use your vehicle.
Increase your excess
Raising your excess can lower your premium. Just make sure you have the financial means to cover this amount in the event of a claim.
Maintain a clean driving record
Safe driving habits can lead to lower premiums. Avoid reckless driving and points on your license to keep your record in good standing. Protecting your no claims discount can also be beneficial in reducing your policy.
If you drive fewer miles, you may qualify for a low-mileage discount. Consider carpooling, using public transportation, or working from home when possible.
To conclude, the recent increase in car insurance premiums is influenced by a combination of factors. While you may not have control over all these factors, there are steps you can take to manage your insurance costs. Comparing car insurance quotes, maintaining a clean driving license, and bundling policies can help you find affordable coverage in the midst of the cost of living crisis. Remember that staying informed and proactive is essential to keep your car insurance premiums in check.