Car insurance premiums in 2018
Ask motorists about the cost of car insurance, and many of them will respond with equal measures of outrage and resentment. Prices are widely seen as excessive, which is particularly irksome when it’s a product you are legally obliged to buy.
There’s a general expectation that premiums only ever go in one direction - up. In quarter 4 of 2017, the average cost of comprehensive car insurance leapt by £20 relative to Q3, hitting £574. But this is actually less than the £582 it cost in Q4 2016. The cost of third party, fire and theft and third party only policies also fell year on year.
So does all this mean we can expect to pay less for our car insurance in 2018?
Inflationary pressures have eased of late - for example, changes to the amounts insurers have to pay out in compensation to those injured in traffic accidents are no longer expected to be as negative as feared. And an overhaul of the small claims process, due in October, is likely to stem the flow of exaggerated and fraudulent whiplash claims.
But forecasting the level of premiums is difficult, with so many factors at play from the severity of the weather to levels of competition to increased use of technology making it hard to say with any certainty which way prices will move in 2018.
Which means drivers should avoid becoming complacent about what they are paying for their car insurance. Even if your insurer holds your price steady at renewal, it’s highly likely you could still save by switching to another firm.
Average premiums by region
One of the main factors affecting how much you pay for car insurance is population density. The more cars there are on the road, the greater the likelihood of collisions and claims, and more claims means higher premiums. That is why drivers in largely rural areas, such as south-west England and the highlands of Scotland, pay less than those in major conurbations.
Another factor affecting price differentials across locations is fraud. Cities such as Birmingham, Manchester and Bradford have high incidences of staged accidents between criminals and deliberate crashes with innocent victims. These are used to generate unjustified claims for personal injury such as whiplash, so when insurers are asked for a quotation by someone living in a postcode where there is a history of fraud, they charge a higher premium to reflect the local risk profile.
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How age & gender affect car insurance costs
Age is a well-established influence on insurance premiums. In simple terms, the younger (and thus less experienced) the driver, the higher the premiums.
Accident statistics show that drivers under the age of 25, and particularly teenagers, are involved in a disproportionately high number of accidents. What is more, these accidents take place at high speed, resulting in serious injuries to a greater number of people because younger drivers tend to carry more passengers than older ones.
This probably explains why ‘black box’ telematics insurance, which allows a driver to demonstrate their safe driving capabilities, is growing in popularity.
It is harder to account for the lower premiums charged to women drivers because insurers are not allowed by law to take gender into account when setting premiums.
The likely explanation is that women tend to drive less expensive cars with lower performance capabilities, factors which of themselves attract lower premiums. Also, if women are making fewer claims, they may be moving ahead of men in terms of earning larger no claims discounts.
It’s important to reiterate, however, that pricing discrepancies between men and women are not the result of insurers explicitly charging one gender more than the other, which became illegal in 2012.
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Source information (MSM car insurance quotes, last 6 years, updated on a quarterly basis)
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