Premiums soar to highest level since 2020 as motorists get back on the road

The average car premium increased by an average of £68 per year for the first three months of 2022.

The increase meant the annual cost of car insurance stood at £688 for the year ending March, according to Compare the Market.

This was the highest average premium over a three-month period since the last three months of 2020 as motorists return to the roads after the pandemic.

The Association of British Insurers has attributed the rise in premiums to inflation, including a rise in the value of second-hand cars, a rising accident rate since the end of pandemic travel restrictions and increases in repair cost prices.

Compare the Market said the cheapest premium available was £568, which meant it was still possible for drivers to switch to a cheaper offer.

Young drivers have seen the biggest increase of £163 in their premiums, but could save £257 by searching for the cheapest deal.

The rise in car insurance prices made it the most expensive average quarter for drivers from October to December 2020, when the average policy was £724.

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Alex Hasty, director of Compare the Market, said drivers would be disappointed that car premiums are less affordable than in previous years, particularly as household budgets continue to be squeezed by rising fuel and energy costs.

Hasty added: “Insurance prices started rising rapidly late last year and premiums remained high in the first three months of 2022. This is concerning as many motorists are already struggling with the cost of driving.”

Can you still save money on your car insurance?

James Blackham, chief executive of By Miles, said he expected the cost of car insurance to come down in the long run, but drivers could still do a lot to cut costs.

“One thing that became very clear from the latest MOT data is that as a nation we are driving much less than we were before the pandemic. The average UK driver now covers the equivalent of London to Aberdeen less than they did before the pandemic, and we expect this decade-long trend to continue.

“Around two-thirds of UK motorists now drive less than 7,000 miles a year.”

John Wilmot, head of car-leasing comparison website LeaseLoco, said motorists shouldn’t be tempted to automatically accept their insurer’s renewal quote just because it’s quick and less hassle to do so.

He said, “You could save a considerable amount on your insurance coverage if you spend half an hour looking up and comparing quotes.”

“Keep in mind that the cheapest is not always the best, so don’t accept the best price without checking the level of coverage. You need to make sure your insurance meets your needs.”

“If you can afford it, pay for your car insurance annually instead of monthly installments. Paying monthly tends to be more expensive because your insurer is lending you the money to pay for your coverage and will add interest to your refunds.”

How to save on premiums

  • Payment per mile: If your mileage has dropped below 7,000 miles per year, then you can save money with a usage-based insurance policy. This means you’ll typically pay a fee up front to cover the car while it’s parked, and then a few cents per mile for what you actually drive.
  • SORRY: If you’re not going to be using your vehicle at all, then it might be worth considering an Off-Road Legal Notice, or ‘SORN’. This means that you tell the DVLA that your car is not parked or in use on public roads, and you will save paying road tax.
  • Request a refund: If you’re one of the 82 percent of people who didn’t get a refund from your insurer during the shutdown, call your insurer and ask why.
  • Switch to electric: If you’re covering shorter distances or making fewer trips, it could be financially and environmentally beneficial to switch to an electric vehicle.
  • Security: Consider where you are going to park your car when you are not using it. Security can lower your premiums. Consider where you are going to park your car when you are not using it.
  • Black box insurance: Consider black box insurance, also known as telematics insurance, where your car is equipped with a device that will monitor your driving behaviour. Armed with this information, insurers can adjust your premiums based on how safely you drive.

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