Car Insurance Premiums are Falling – But Only if you Shop Around

Motorists perpetually hit by rising costs will be cheering the latest news that insurance premiums are falling at last – but don’t expect to be pleasantly surprised by your renewal quote.

The good news comes from price comparison site Moneysupermarket.com, where its experts have analysed 1.7 million quote requests for the first quarter of 2018. The results reverse the trend of rising premiums over the last three years.

Findings show a decrease of 12%, meaning that the average car insurance premium is £504. This is still higher than the £421 figure revealed in 2015, but much better than the £574 many drivers would have been forking out for late last year.

Moneysupermarket.com attributes the drop to changes in personal injury compensation payments that caused a big rise last year with insurers anticipating larger payouts. Since then, however, the government has made a u–turn on the policy.

The immediate future is also looking bright with an expected overhaul of the legal system aiming to reduce the number of fraudulent injury claims. With whiplash adding around £40 to every premium, motorists could be looking at a further drop this time next year.

Not all drivers can expect to receive a 12% decrease in premiums, however, as this depends on a variety of factors. Moneysupermarket.com’s data shows motorists living in densely-populated areas such as London, north-eastern England or Northern Ireland could expect to lose around 9-10% from their previous quote.

Age is also an important factor, with 17-19 year-olds by far the most accident-prone group, but claim rates begin to show a significant drop for motorists over the age of 25. Moneysupermarket.com attributes falling premiums here to the rise in popularity of ‘black box’ telematics insurance schemes, where young drivers agree to supply driving data gathered by an electronic device installed in their vehicle.

The findings also contain the proviso that drivers must shop around for their next premium rather than accepting the renewal figure from their existing provider. As Moneysupermarket.com – which provides a shopping service to insurance buyers – explains, insurance companies offer their best prices to new customers to grow their business, and charge existing customers more to subsidise the lower premiums.

Kevin Pratt, consumer affairs expert at Moneysupermarket.com, said: “For once, it’s good news for hard-pressed motorists after months of price increases.

“Last year, premiums rocketed because of changes to the way personal injury compensation payments are calculated – insurers increased prices to help fund larger pay-outs to victims of accidents.

“Thanks to a government U-turn, the impact of the change on compensation awards will be reduced at some point this year, allowing insurers to ease premium hikes.

“Additionally, the government is overhauling the legal system later this year to reduce the number and size of fraudulent whiplash claims, which currently add £35 to £40 to every car insurance premium.”

The survey results have been published here: https://www.moneysupermarket.com/car-insurance/price-comparison-index/