No, it’s not a case of deja vu – car insurance premiums really are set to increase…again, and as of June, car owners can expect to pay up to £800 for the average policy. It’s yet another blow for drivers who have faced price hikes of around a third in the space of just two years.
Back in June 2015, the average car insurance policy stood at £600, by the summer of 2016, the average was £701. This summer, policyholders can expect a 14% increase, making the legal requirement of insuring your car an expensive, but necessary burden.
Our Premium Drivers Index which tracks car insurance costs, shows that in the first few months of 2017, the average policy cost £729. We also found that the difference between the average and the cheapest premium was £128 – that’s the biggest gap we’ve recorded since we began collecting data in 2012. So, what does that mean? Well, it means, that car owners could stand to save around 17% on their car insurance, just by comparing quotes.
But why has car insurance increased so dramatically and quickly – well, there’s no single answer, as our director, Simon McCulloch says:
“No one factor has driven premiums up this much, but some measures taken over the past years have put serious pressure on policies. One of the most prominent causes of these rises is the doubling of insurance premium tax over the past two years. Equally, the recent decision by the Ministry of Justice to change how compensation is calculated, has also added substantial amounts to the average person’s policy.”
Insurance premium tax (IPT) is paid on most types of insurance policy. It was introduced in 1994 at just 2.5% and is typically included in the cost of a premium, so you won’t usually notice it. Since then, it’s been increased no less than six times, including the most recent rise:
• April 1997 to 4%
• July 1999 to 5%
• January 2011 to 6%
• November 2015 to 9.5%
• October 2016 to 10%
• June 2017 to 12%
Increases in IPT, coupled with the changes in how compensation claims are calculated, have systematically pushed car premiums up, and there’s not much sign of it abating; as Simon McCulloch puts it: “drivers can therefore expect prices to continue to rise well into 2017.”
So, what’s a responsible driver to do? The advice has always been to search for the most competitive quote and with continual price rises, that advice is even more pertinent. Which is why you’re in the right place, from third party only to comprehensive, we’ll find a policy to suit you. And it’s not just the traditional policies that you should take a look at, consider telematics or age related cover such as for the over 50s – both can help drive down the cost of premiums. But, whatever you look for, make sure you comparethemarket.com to get the very best value for your money.