Why has Car Insurance Gone through the Roof?

The answer to this questions will almost certainly be ‘yes’, new figures now show that in the last year car insurance has risen sharply across Britain by 12.3%. This now makes the average cost of car insurance a whopping £843 and is seriously having an effect on the motor industry. Car insurance has gone up nearly 3 times the rate of Consumer Prices Index (CPI) inflation rate of 4.5 per cent.

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Photo Credits: http://www.flickr.com/photos/rusty_clark/6732083503/

Live in the North of England and pay even more!

Even though this sharp rise has been felt across the whole of the UK, the North has been hit the hardest, areas such as Manchester and Oldham have seen average premiums rise by 27.9 %, making the average price of a policy £1,437. Bradford and Liverpool have been hit hard too with premiums rising by around 27% in the last year making the price of comprehensive cover just over £1300.

Should we be worried by these rises?

Really it’s hard not to worry about these crazy rises in prices, the fact of the matter is, we still strongly rely on our cars in the UK as we do not have a transport system that can compete. According to Gareth Kloet who is the head of car insurance at Confused.com he has said “I am worried by these rises in car insurance policies, drivers have been hit by more than a 25% increase!”

Why not Insure Third Party?

There was a time when, if you couldn’t afford to insure a car Fully Comprehensively you would take out a Third Party policy. Over the last 12 months, the price of Third Party Insurance has risen even more sharply meaning that there really isn’t much of a difference between Third Party and Full Comprehensive cover.

What is to blame for this increase?

Everyone is asking the same question ‘why have premiums gone up so much?’ Could it just be down to people crashing more cars? The real answer is that premiums have gone up because people are playing the system, once they have had an accident they are looking to make a claim for personal injury. The rise of ‘no win no fee’ legal help has meant that the money people are claiming has to come from somewhere.

Car parts are becoming more expensive

There are other reasons causing this increase, repairing cars is getting more expensive, they are being made of more expensive materials to save weigh and be stronger which comes at a price when you have to repair them. If you think about it, pretty much every car on the market comes with alloy wheels and metallic paint, this was not the case 10 years ago.

Companies in administration

One of the largest insurance companies in the UK, Quinn entered administration a few years back and consequently lost their authority to insure in the UK. This authority was then handed back to Quinn with limitations and subject to a 20% increase in premiums across the board.

Initially, because Quinn was such a cheap insurer the market attempted to compete with them, as time when by the market realised that the company was in trouble again and that there was no need to compete with them, consequently increasing premiums.

The consumer got clued up!

Lastly, customers became wise to the ways that insurance companies generated business, offering heavy discounts on the first year’s premium and then bumping up the prices in the second year. This lead to customer’s constantly changing insurer to find a better deal and the loss of customer loyalty. Due to the fact that insurance companies could not retain their customers, the heavily discounted premiums that were once offered are a thing of the past. ItHigh insurnace premiums are here to stay!

Car insurance has become very expensive and there does not seem to be any hope on the horizon for premiums to fall, its just one of those things we all have to deal with!

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