What impact is Coronavirus having on the cost of car insurance?

Motor premiums may be falling, but it’s still worth taking steps to drive the cost down even further. Here we take a closer look.

Bonfire night

Lockdown has given us little to laugh about, but there has, at least, been some good news for motorists, as car insurance premiums have continued to fall throughout 2020.

We’ve crunched the numbers and found that, while the rate of decline has slowed over the past three months (July – September), premium costs continued to decrease.

The cost of an average fully comprehensive premium in the UK currently stands at £473. This is down 6% from £503 at the end of the final quarter of last year (October – December 2019).*

Why have costs gone down?

This decrease in the cost of car cover is likely to be linked to reduced vehicle usage under the Covid-19 lockdown, and fewer cars being on the road.

Research shows that road traffic levels dropped by 73% at the height of lockdown.**

By the same token, as measures eased over the summer – and people started to use their cars more, meaning more traffic on the roads – our findings show a slowdown in the fall in insurance prices.

According to figures, there was a modest drop of 0.3% between quarter two (April – June 2020) and quarter three (July – September 2020). This suggests the fall in car insurance costs may be starting to taper off.

Where are the cheapest and most expensive locations for car cover?

When setting their premiums, car insurers take your postcode into account.

Your address is one of a number of factors which can affect how much you pay for your policy – along with things such as your age, job title and mileage.

Our research shows that East London continues to have the highest premiums in the country at £950 per year.

This is more than double the UK average of £473, and a huge £672 more expensive than the Isle of Lewis, the cheapest location, where premiums are just £293.

Other places featuring in the ‘most expensive locations for car insurance premiums’ include North West London taking second place at £875, and Ilford and Barking taking third place at £870.

When it comes to the ‘cheapest locations,’ Dorchester, Llandrindod Wells and Truro share second place at £295, followed by Exeter and Kirkwall at £297.

Which age group pays the highest premiums?

Younger drivers can often find themselves hit with the most expensive car insurance policies as insurers view them as a higher risk on the road. This is because they are more likely to be involved in an accident, make a claim, or have a claim made against them.

That said, our research shows premiums have fallen year-on-year by a fifth (21%) for motorists aged between 17 and 19 – down from £1,037 to £823. Even so, drivers in this age group have seen a quarterly price increase of £46, with premiums going up from £777 to £823.

Further findings show that at present, the 20-24 demographic pays the most on average, with annual premiums costing £917.

This compares to an average of just £281 for the age group who pay the least – motorists aged 65 or more.

Seize the opportunity to shop around for a better deal

With so much uncertainty ahead – and local lockdowns affecting claims volumes – it is hard to predict whether or not prices will creep back up again.

But what is certain is that if your policy is up for renewal, the best way to make savings is by shopping around for a better deal.

Tempting as it may be to automatically renew with your existing provider, you need to avoid this, or you could end up paying more than you need to. When it comes to insurance, there are few rewards for loyalty.

By comparing quotes, you can find the right policy for your needs at the right price – and could potentially Save up to £280.94 ***

What other steps can I take to keep car insurance costs under control?

  • Pay for your policy annually upfront, as this is almost always cheaper than paying in monthly instalments.
  • Opt for a telematics policy. This type of policy involves your car being fitted with a data-recording ‘black box’ to monitor your driving habits. Insurers then reward safe motoring with lower premiums.
  • Increase your excess. But make sure you can still afford this cost if you need to make a claim.
  • Look into fitting additional security measures, such as an immobiliser, tracking device or alarm.
  • Park your car on a driveway, rather than on the road. Better still, park it in a garage. This reduces the risk of your vehicle getting stolen or vandalised.
  • If you’re a younger driver, you could consider adding a more experienced driver, such as a parent, to your policy. But be careful not to commit a practice known as ‘fronting.’ This is where a parent falsely claims to be the main driver of a younger, less experienced, motorists’ vehicle to reduce the cost of insurance. This is illegal.
  • Think about ditching added extras, such as a courtesy car, legal assistance, breakdown cover and key cover. You may be able to save money by removing these features.

 

*All figures based on MoneySuperMarket internal data, correct as of July 2020.

** https://inews.co.uk/news/environment/road-traffic-all-time-high-coronavirus-lockdown-eases-567608

***51% of consumers could save up to £280.94 Consumer Intelligence, September 2020

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