Drivers hit by car insurance rise

Drivers hit by car insurance rise
Drivers hit by car insurance rise

The cost of car insurance rose in the last quarter of 2017, pushing up the average comprehensive premium to almost £600 a year.

According to an analysis of one and a half million insurance quotes, the average policy cost increased by four per cent in the last three months of last year, despite an overall drop across the full year.

Along with rising fuel prices the change in insurance costs mark a bleak start to 2018 for motorists with the average premium now costing £574.11, up from £553.28 in October.

There were wide variations across the country with some regions seeing a near-10 per cent increase while other areas enjoyed reductions of between one and four per cent.

Drivers in Lincoln were hardest hit by increases – the average premium in the LN postcode rising 9.21 per cent, or £36.83, to £436.67. Wolverhampton (9.11 per cent) and Wakefield (8.74 per cent) were next worse-hit.

Motorists in Sutton, by contrast, saw a 3.96 per cent reduction in their premiums, although the £24.88 drop still left them paying £603 on average. Preston and Guilford saw more modest reductions – 2.6 per cent and 1.97 per cent, respectively – but both enjoyed lower-than-average premiums of £557.85 and £444.31.

Biggest increases Q3-Q4 2017

Location Q3  Q4  % change £ change
LN – Lincoln 399.84 436.67 9.21% £36.83
WV – Wolverhampton 689.71 752.535 9.11% £62.82
WF – Wakefield 638.165 693.935 8.74% £55.77
WN – Wigan 628.32 681.62 8.48% £53.30
KW – Kirkwall 301.885 327.16 8.37% £25.28
IP – Ipswich 388.56 419.585 7.98% £31.03
TQ – Torquay 336.12 360.99 7.40% £24.87
KY – Kirkcaldy 343.97 367.76 6.92% £23.79
CO – Colchester 450.18 481.04 6.86% £30.86
ME – Medway 548.8 586.26 6.83% £37.46

East London remains the most expensive place to insure your car, with premiums sitting at £1090.65, while the Shetland Islands are the cheapest at £310.80.

Despite the rise in premiums the final three months of 2017 were still cheaper on average for motorists than the same period in 2016. But not everyone enjoyed the overall reduction, with some of the youngest and oldest drivers being hit by rises.

Those aged over 65 saw the average year-on-year cost of a fully comprehensive policy rise seven per cent, from £254.06 to £273.02. Those aged between 21 and 24 were also hit with a seven per cent increase, with the average policy rising from £1,055.90 to £1,128.94.

According to MoneySuperMarket, which analysed its database of applications to get the information, three key factors affected premiums in 2017 – changes to the “Ogden” discount rate, the increase of insurance premium tax (IPT) and an increase in fraudulent claims.

The Ogden discount rate, which determines how much compensation insurers pay to the most seriously injured accident victims was changed in March, moving from 2.5 per cent to -0.75 per cent, dramatically increasing the amount paid out.

Biggest reductions Q3-Q4 2017

Location Q3  Q4  % change £ change
SM – Sutton 628.32 603.445 -3.96% -£24.88
PR – Preston 572.78 557.855 -2.61% -£14.93
GU – Guildford 453.25 444.31 -1.97% -£8.94
DD – Dundee 383.02 375.54 -1.95% -£7.48
BH – Bournemouth 418.08 409.97 -1.94% -£8.11
LA – Lancaster 410.15 402.47 -1.87% -£7.68
KT – Kingston-upon-Thames 509.335 501.41 -1.56% -£7.92
N  – North London 912.8 901.4 -1.25% -£11.40
NE – Newcastle 493.16 487.755 -1.10% -£5.41
SO – Southampton 441.16 436.45 -1.07% -£4.71

IPT also increased for the third time in two years, rising from 10 to 12 per cent in June and fraudulent claims for non-existent or exaggerated injuries are thought to add around £40 to every car insurance policy.

Kevin Pratt, consumer affairs expert at MoneySuperMarket, commented: “Last year showed how many factors influence what we pay for our car insurance. The change in February to the way compensation payments are calculated took everyone by surprise, and the hike in IPT in June was another hammer-blow.

“It is likely the discount rate will be set at between 0 and 1 per cent at some point in 2018, which should allow insurers to reduce premiums. We can only hope there are no further increases in IPT, either in the Chancellor’s Spring statement or in the Budget in November.

“We should also keep an eye on reforms to the small claims process, due in October. Hopefully these will reduce the incidence of fraudulent whiplash claims. ”


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