Car insurance premiums are rising again in UK and this is the reason why
Auto insurance premiums are expected to rise as used cars become more expensive, experts have warned.
Policyholders are paid at the market value of a vehicle by insurers if it is stolen or written off, but with the increase in the price of used cars, insurers have to pay more each time, which increases the costs. bonuses at all levels.
And a chronic shortage of vehicles for sale means that many used cars will soon be worth more than new versions of the same models.
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Louise O’Shea, CEO of Confused.com said, âThe cost of auto insurance has dropped significantly over the year. However, we are now starting to see prices increase in parts of the UK with costs for some drivers now Â£ 23 more in the last quarter compared to the previous three months. And this is undoubtedly due to the fact that we spend more time on the road and therefore the probability of complaints will increase.
âNow we are seeing reports of an increase in the value of cars, our data suggesting that the average cost of a five-year-old vehicle is now 23% more expensive than 12 months ago. And that will force insurers to increase the cost of insurance. When an insurer sets the price of insurance, it takes into account the cost of replacing or repairing the car, and the higher the cost, the higher the premium will be.
âSo while drivers are enjoying cheap premiums right now, it’s really important to keep in mind that when it comes to renewing in the next few months, there’s a chance their price will go up. “
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Part of the blame for a global shortage of microchips is the disruption of supply chains, which is causing used car prices to skyrocket. There is also a lack of availability of auto parts for the same reason, resulting in delays in repairs, further increasing costs.
The cost of claims has been rising for years as cars have become more expensive to repair. Despite this, auto insurance is currently around 7% cheaper than last year, according to the Association of British Insurers.
Direct Line Managing Director Penny James said: “Used car costs are the biggest upward pressure on claims costs right now.”
And Louise O’Shea added: âIt is important to remember that the FCA (Financial Conduct Authority) changes that will take effect from January will not guarantee them a cheaper renewal premium. While insurers will be banned from pricing new and renewing customers differently, if the average cost of car insurance in the UK is higher than it was the year before, there are there is a good chance that the turnover will also increase.
âThings will get competitive, and it is very likely that there will be insurers who will be able to offer you a better price, even if your renewal price is actually cheaper. When you see premiums rising, which is unfortunately inevitable due to an increase in the severity of accidents and therefore higher claims costs, shopping around for insurance will be the easiest way to save money.
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