15 April 2024

Why is the cost of car insurance rising and what can I do to beat it?

Car insurance premiums have risen since the pandemic but we are here to help

The extent of the rise in car insurance premiums in 2023 came as a shock to many and 2024 is likely to see another increase for most of us. But why are car insurance prices going up so much?

There are several contributing factors. The cost of car repairs has increased hugely due to higher material and labour costs. The addition of high inflation and a reform in pricing also added to the premium increase of about 25% in 2023. This equated to an average rise of £118 per policy. And, according to a report from EY, we are likely to see a further rise of 10% in 2024.

The pandemic has created on-going issues with the supply chain of new cars and also led to a change in driving patterns. During the pandemic a larger number of people worked from home. With fewer cars on the road there was less risk of accidents and therefore premiums went down. Since then, the number of cars on the road has gone back up and premiums have risen to reflect that.

With premiums set to increase further, it is even more important to compare car insurance policies so you can find any better deals.

One member of our team paid £341.02 for her car insurance policy in 2023 and was offered a renewal price of £363.76 for 2024. By comparing quotes through MoneyMaxim, she was able to find a policy through a different insurer for £290.10. That’s a saving of over £70!

Here at MoneyMaxim we can help with standard car insurance as well as specialist car insurance such as for learner drivers. We can also assist if you need to insure a classic car or a vehicle that has been imported.

Newer drivers can be the most affected by price rises as their premiums tend to be higher. Any percentage increase to their premiums will see a hefty increase in price. If you have recently passed your test, let us help you compare car insurance policies so you can find the car insurance that works for you at the lowest price.

If your car insurance renewal letter has arrived, it can be very tempting to just stay with the same insurer but by doing this you could well be paying more for your car insurance than you need to. It takes just a few minutes to find out what policies are available to you. You only need to enter your details once and prices will be with you in seconds.

The ABI (Association of British Insurers) stated in a recent article that insurers paid out £9.9 bn on motor insurance claims last year which was a rise of 18% from 2022 and the highest figure since the ABI started these records. Much of this rise was due to the 31% jump in repair costs from 2022. Repairs aren’t costing more just because of labour and parts. Energy price increases are another element.

Martina Neary from EY goes on to say that ‘While many consumers expected premiums to rise, the level and pace of the increase is much higher and sharper than many expected. The current economic environment if of course difficult for both consumers and for firms but as inflation starts to fall back, conditions for consumers and insurers alike should improve.’