MOTOR insurance costs have risen 42 per cent in a year.
Here, James Flander looks at how you can reduce your premiums . . .
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WHAT IS DRIVING UP PRICES?
INSURERS are blaming above-inflation increases to repair prices, more thefts and soaring car production costs.
They also say it’s now more expensive and difficult to fix vehicles because of the rapid advance in vehicle technology.
And a shortage of skilled mechanics is further adding to insurance costs.
Meanwhile, the Association of British Insurers (ABI) reported that a record £9.9billion in claims last year, equivalent to an average of £1.13million per hour, has pushed up premiums.
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The average cost has jumped 69 per cent from £532 to £924 a year since March 2022, according to price comparison website Compare the Market.
Julie Daniels, the company’s motor insurance expert, said: “Young motorists have seen the steepest increase in the cost of car insurance. The average premium for a driver aged under 25 has risen by £613 over the past 12 months, to reach £2,077.”
However, costs drop by an average of £1,142 once a young motorist reaches 25.
Those aged 65 to 79 still pay the least, with their average premium now sitting at £425 a year.
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But there are several ways to slash those costs.
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SHOP AROUND AND HAGGLE
AUTOMATICALLY renewing car insurance might seem convenient, but it can often lead to missed savings.
Sara Newell, an insurance expert at MoneySuperMarket, recommends that motorists compare quotes from multiple providers before acting on their renewal.
She said: “Starting the search about a month before the existing policy expires allows ample time to explore better deals.”
Not all comparison sites have the same range of insurers, so it’s a good idea check two or three from GoCompare, Compare the Market, MoneySuperMarket and Confused.com.
Insurer Direct Line is not on any comparison sites, so check its prices directly.
You can also get a free cash bonus if you buy your insurance from a cashback site such as Topcashback or Quidco.
If you and do not want to swap, ask your insurer to match the cheapest deal you have found. If they do, great — but if they do not, then it’s time to ditch and switch.
PAY UPFRONT
MANY insurers charge extra fees for monthly payment plans.
These can vary, but might include set-up fees, transaction charges or interest for spreading the cost over several months. By paying annually, you can avoid these extra costs and keep more money in your pocket.
Drivers can typically save up to £46 by paying for their annual car insurance premium in one lump sum, according to Compare the Market.
TWEAK YOUR JOB
CERTAIN jobs are seen as more risky than others for insurance purposes.
Tom Banks, GoCompare’s car insurance expert, said: “Surprisingly, how you describe your job can also affect your car insurance price — with ‘chef’ and ‘cook’ potentially bringing up different quotes.”
So making small but accurate changes to your job title can save you money. For example, swapping your role from “chef” to “caterer” can save you £20, GoCompare found.
And changing from “fast food delivery driver” to “delivery driver” could save you £40.
But lying about your job could invalidate your policy, so make sure any tweaks are legitimate and accurate.
SAVE THE DATE
RENEWING your car insurance sooner rather than later could save you some cash.
New cover becomes more expensive the closer you get to renewal. You can buy your insurance up to 29 days before the policy start date and “lock in” the price you are quoted that day.
According to GoCompare, a typical driver can save up to £265 by buying new cover at least 27 days before their current policy ends.
INCREASE YOUR EXCESS
THE excess is what you agree to pay each time you need to make a claim on your policy.
When setting up, you can usually choose your own excess, which can be as low as £100 and as high as £500 or more.
The higher your excess, the lower your premium and vice versa. This means you could lower the cost of your insurance by agreeing to pay more if you need to make a claim.
But before you hike your excess, make sure you would be able to afford it if necessary.
LOOK FOR DISCOUNTS
TELEMATICS or black box policies offer tailored premiums based on driving behaviour.
The device records a car’s speed, the distance it travels, how it accelerates and brakes and what time of the day or night it is used.
Drive well and you will benefit from lower prices. Drive poorly and your premium will shoot up.
Compare the Market’s research has shown that almost one in ten young drivers has reduced the cost of their car insurance by switching to a telematics policy.
According to MoneySuperMarket, the average price paid for a telematics policy across all age groups is £1,152.25 a year.
And if a typical driver under the age of 25 pays £2,077 a year, taking out a black box policy could save them around £925.
Specific groups, such as new drivers, can benefit from slightly cheaper premiums by taking part in initiatives such as Pass Plus training, a course totalling six hours to help newly qualified motorists improve their skills and safety.
A robust no-claims discount will always go in your favour.
‘My premium was reduced by £120 within minutes’
SOCIAL media executive Rachael Warren was stunned to receive a renewal quote 50 per cent more than the previous year’s price.
She had paid £300 to insure her Kia Picanto with Hastings Direct in 2023. But last month she received her renewal quote and it was for £454.
Rachael 34, from Gloucester, said: “The new quote was ridiculous, considering I have eight years’ worth of no-claims.
“I headed straight to Compare The Market to get a better quote so I could use it as a bartering chip with Hastings.”
She discovered it would cost £350 to insure her car for another year with Tesco and she could get cashback on top through TopCashback.co.uk.
She rang Hastings Direct and threatened to leave unless it could give her a cheaper premium than the one she found. Rachael said: “Hastings backed down and cut my renewal to £334 within minutes.
“I would encourage everyone to haggle with their provider before making a switch.”
A spokesperson for HastingsDirect said: “We issue renewal quotes based on information we hold and would encourage customers to check their details and shop around.”
ENERGY FIRM’S SCOT TO PAY COMPO
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SCOTTISH Power is to pay customers £1.5million in refunds and compensation after it charged them above the price cap during the height of the energy crisis.
The firm charged 1,699 direct debit customers a higher rate between 2015 and 2023, which should only have applied to those who pay by standard credit, or on receiving a bill.
The average amount overcharged was £149 per customer. Ofgem said Scottish Power is paying a total of £250,000 in direct refunds to affected customers as well as another £250,000 in goodwill payments, an average of £294 per customer.
All payments will be made automatically, and customers do not need to do anything.
The energy firm reported itself to the regulator last summer when it discovered operational errors had led to the mistake.
If you pay your bill by direct debit, the monthly amount should be “fair and reasonable”. If you don’t think it is, complain directly to your supplier. It must explain why it has chosen that amount.
You can ask for any credit back too – although it is recommended to keep it during warmer months so your bills don’t go up so much in the winter.
To dispute a bill, take a meter reading. If it is lower than your estimate, ask your provider to lower your payments. If you are unsuccessful, you can complain to the Energy Ombudsman.
CALLS FOR IMPROVEMENT
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VIRGIN Media topped the latest list of the most complained about broadband, landline and pay-TV providers, according to Ofcom.
The complaints were driven by how customer issues were handled, although there was a fall from the last quarter. Ofcom publishes the data every three months.
Sky came in with the fewest complaints at five per 100,000 customers, while Plusnet and EE both received nine.
O2 also came top of the list for mobile complaints, receiving seven complaints per 100,000, compared to the second-highest, Three, with four and an industry average of three.
Rocio Concha, Which? director of policy and advocacy, said: “At a time when many telecoms firms have implemented mid-contract price hikes of almost nine per cent, it’s unacceptable that poor customer service from some of the biggest telecoms firms has led thousands of their customers to complain to the regulator.”
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A Virgin Media O2 spokesman said: “We’re committed to providing an excellent service to our customers.
“While overall these complaints represent a very small proportion of our customer base, we acknowledge there is a need for improvement, which is under way, and we’re focused on getting this right.”
