Drivers are facing higher car insurance costs for the first time in three years, with the average annual premium now standing at £719. This marks an increase of £8 over the past three months, according to data from Confused.com.
Sharp rise in claim payouts
The average value of an insurance claim has surged by 42% since 2020, rising from £3,842 to £5,464. Despite this, the number of claims made over the same period has dropped by 59%.
Matt Crole-Rees, motoring expert at Confused.com car insurance, explained: “Drivers have benefitted from car insurance price drops for some time now. But now we’re seeing that prices are starting to increase slightly in recent months, which means motorists could soon see their price increase when it comes to their renewal.”
Why prices are rising
According to Crole-Rees, insurance premiums are primarily based on risk and claims data. While fewer claims are being reported, the cost of each claim has become significantly more expensive for insurers to rectify. “This isn’t something drivers can control, but it doesn’t mean to say they can’t still save money on their insurance,” he added.
Tips to save on car insurance
Confused.com advises motorists to shop around when their renewal is due to ensure they get the best price. Data from the comparison site shows that obtaining a quote 28 days before renewal can lead to savings of up to 53% on the premium. “Being organised and getting it sorted early can pay off,” Crole-Rees said.
Drivers are encouraged to compare quotes from multiple providers and avoid leaving renewal to the last minute to maximise potential savings.
