The cost of car insurance isn’t just rising, it’s rocketing
. This month saw Zurich increase it’s premiums by a jaw-dropping 20%, while the latest figures from The AA show car cover costs rose by more than 7% in the last three months of 2009 alone – and that figure doesn’t include the hike by Zurich.
What’s behind this? Simon Douglas, director of AA Insurance, warned that the cost of claims is actually outstripping insurers’ income. Personal injury claims and fraud have significantly increased costs, he explained.
Simon added: “As a result, many insurers are reporting record underwriting losses. The situation is clearly unsustainable and the inevitable result is that premiums increase, despite the extremely competitive nature of the market.”
Zurich said that it’s legal fees that are really ramping up costs: “The biggest rising cost for us is the sheer volume of personal injury claims. The public have been bombarded with no-win, no-fee adverts, so they’re claiming where previously they wouldn’t have.
“Obviously if people are injured, they can claim – but it’s the legal fees that add up. They can be as much as the compensation that’s paid out. Unfortunately, in the long run, it’s drivers who pay for this through higher premiums.”
So it looks like Zurich won’t be the last to hike prices, but how can you keep yourself behind the wheel for less?
Prices are rising so rapidly that the quote you see today may not be there tomorrow. When you use our car insurance comparison tool, some of the prices you’ll see are guaranteed for 30 days, giving you plenty of time to make up your mind.
However, others are only valid that day, so if you want that price, it’s essential you grab it when you see it.
Steve Sweeney, moneysupermarket.com’s car insurance expert, explained: “You can start shopping around for cover as soon as you’re within 30 days of your renewal date.
“With prices rising as fast as they are, I strongly recommend searching and signing up as soon as possible, or you risk missing the best price.”
Prices may be heading up but by comparing car insurance providers and finding the best deal possible, you can still save money.
The research organisation Consumer Intelligence published a report this month that shows drivers can cut their premiums by up to 35% by shopping around. You can read more about that report in our article ‘Drivers hit by biggest ever premium hike’.
Even if your current provider’s renewal offer is excellent, it’s still worth taking a look at what the rest of the market has to offer.
Steve said: “Insurers are starting to try and keep their customers, so they’re offering better renewal quotes. If you can’t beat the price you’re offered, it’s still worth shopping around to see if you could improve that cover.
“Maybe you could lower your excess or add breakdown cover for the same price. Some of the car insurance providers quoting on moneysupermarket.com even offer freebies like your annual MOT.
"For example, drivers buying a Marks & Spencer policy through moneysupermarket.com's car insurance comparison page will be given a free car wash every month for a whole year - a deal worth up to £84."
What kind of car are you driving? If it’s a suped-up sports model with alloy wheels and black-out windows, you’ll pay more than you would for a smaller car with no modifications.
Steve commented: “Modifying your car can have a big impact on your premiums and make your cover much more expensive.
“If you do decide to modify your vehicle, make sure you tell your insurer. If they aren’t aware then they could null your cover, leaving you unprotected if you are involved in a crash.”
There are some obvious expenses associated with bad driving – get caught speeding, for example, and you’ll be hit with a fine and higher car insurance premiums.
Believe it or not, there are ways to guzzle less fuel while driving – small habit changes that can have a big overall impact on your costs by making you more fuel efficient on the road. Here are a few examples:
- Keep your speed steady and avoid breaking suddenly.
- Try to avoid putting the heating on, or the air-conditioning when it’s hot.
- Drive in the highest gear you can because then the car doesn’t have to work as hard.
- Kick any unnecessary weight out of your car – your golf clubs can live in the garage!
- Make sure your tyre pressure is right, underinflated wheels can increase your fuel consumption.
- Keep your windows and sunroof closed to avoid adding to the car’s drag factor.
There are things you can do that really will bring down the cost of your car insurance.
Here are a few ways to make yourself a better bet for insurers:
- Stay off the road overnight. If you can park your car on a drive or in a garage, you’re less of a risk.
- Pass your Pass Plus. New drivers are the worst hit by soaring premiums, but if you take this course then insurers may reduce your premiums by as much as 36%.
- Increase the excess. If you can afford to pay it after an incident, agree a higher excess with your insurer and this should lower the cost.
- Add an older driver. Another good tip for young motorists is to add an older driver to the policy – this can often reduce your premiums. Don’t be tempted to make them the main driver, though, as this can invalidate your insurance.
When prices start to rocket, there will inevitably be more people choosing to risk driving without cover.
Last year, the Motor Insurers' Bureau (MIB) launched a campaign urging drivers to stay insured, warning that more than 232,000 people were convicted in 2008 for getting behind the wheel without insurance.
Uninsured drivers face vehicle seizure, points on their licence and a costly fine - not to mention incredibly expensive car insurance premiums in the future.
Watch our interview with the MIB 'Don't take the risk - stay insured' for more information