Motor Insurance price rises
posted 27th October 2022
Over the last few years there has been a large fluctuation in insurance costs for motor vehicles. During 2020 and 2021 there was a significant drop in premiums, attributed to the Covid-19 pandemic and lockdown. With more people working from home or isolating there were less vehicles on the road. Drivers reported reducing their annual mileage by 40% during 2020 and Police forces reported a 26% drop in the number of road accidents attended during the same period.
By January 2022 all lockdowns had been lifted and life (and driving habits) returned to normal. This coincided with the Financial Conduct Authority’s (FCA) new rules to stop the habit of some insurers hiking up renewal prices for loyal customers.
Also by then insurers were heavily paying claims made by businesses that were unable to open during the earlier lockdowns and who had claimed for loss of earnings and business interruptions. Although this didn’t directly effect motor insurance, the same companies that insure vehicles generally also insure businesses. The money lost from these claims had to be made up by increasing the costs of all policy types across the board.
By February 2022 the Russian/Ukrainian war had started, leading to Worldwide financial instability and shortages of resources. This directly effected repairers ability to obtain parts for repairs (leading to delayed repairs & increased courtesy/hire car costs) as well as a hike in the price of parts.
Additionally, the cost of second hand cars has increased dramatically due to the unavailability of new cars (largely due to the semiconductor chip shortage that has been going on since near the beginning of the pandemic), so where a vehicle is written off insurers are paying out more than usual to policyholders as the Market Value of second hand vehicles has also increased.
As a result of this it is expected that Motor Insurance premiums will continue to rise over the next few years.
How can I reduce my premium?
There are various ways to reduce your premium, including:
- Can you reduce your annual mileage by working from home or using your vehicle less? Your annual mileage directly effects your premium, although your policy should be based on the mileage you need. Artificially reducing your mileage but driving more than you say could cause problems if you need to claim.
- Increase your excess. By agreeing to a higher excess insurers may provide a discount, although this is not always a huge amount.
- Restrict the drivers on your policy. If you have drivers named on your policy who rarely drive the vehicle it may reduce the premium if they are removed.
- Can you park in a safer place. If you park on the road, can you park on a driveway or in a garage? Removing the vehicle from the road may help reduce premiums.
- If you pay by Direct Debit, consider if it would be cheaper to pay in full, even if it means using a credit card. The APR may be less than that charge by insurers.
If you would like to discuss this further, or would like us to look at your quotation, please contact the Motor Team on 01442-256783 or at Motor@Advance Schemes.com.