Drivers aged 55 to 60 have seen the biggest hike in car insurance premiums in the past year, while almost all age groups are now paying record amounts for cover, new data released by the Association of British Insurers shows.
The average comprehensive car insurance policy now costs £462, an increase of 8% in the past year. People aged in their late 50s and late 80s have experienced the highest annual rises, at nearly £35 typically.
The ABI is now warning that due to a number of factors, ‘waves’ of premium increases could occur over the coming year.
Why have car insurance premiums risen?
In February, the government made a significant change to the way that compensation for serious injuries following a car accident are calculated.
According to the ABI, this change will enormously increase claim costs – with drivers picking up the tab through their car insurance premiums.
The Office for Budget Responsibility predicted the move could increase premiums by 10%
Another increase to insurance premium tax in May has also had an impact on premiums. The tax, paid on most types of insurance, has doubled from 6% to 12% since 2016.
The ABI expects to see costs soar again in January 2018, when many people renew their insurance.
Age groups hardest hit by the changes
The graph shows the average premium and the year-on-year rises in costs for different age groups from 2015 to 2016.
Drivers aged 55 to 60 has seen premiums rise by more than 12%.
And while drivers aged 18 to 20 have seen costs fall by 2.7%, largely due to greater use of telematics ‘black box’ insurance which charges a premium based on driving behaviour, they are still paying an average of £973 a year for comprehensive cover.
What can I do to cut car insurance costs?
Check last year’s premium
Since April 2017, every insurer has been obliged to publish the premium you paid the previous year when it offers you a new rate to renew your cover, so you can see how much your insurance has gone up.
Use comparison sites
Armed with this information, use a couple of price comparison sites to search for equivalent cover, and see if there are any insurers offering a cheaper quote.
Insurers tend to offer some of their lowest prices on these sites, hoping to win your custom and then increase premiums when you come to renew after one or two years.
It’s also worth getting quotes directly from insurers that aren’t on comparison sites.
With a list of the cheapest quotes, call your original insurer and ask them to match what you’ve found elsewhere.
In November 2016, we asked more than 4,000 Which? members if they’d haggled over the cost of their car insurance in the past year. Around half said they’d given a go – and 79% of them were offered a better deal or an incentive to stay by their insurer.
If it won’t match the prices you’ve found from other insurers, be prepared to walk away – there’s no bonus for loyalty.
Find out more: How to get cheap car insurance