Typical car insurance premium now costs £629 as prices rise to their highest level in THREE YEARS
- Motorists pay higher prices as insurers pass on higher claims and costs
- Drivers in London, Scotland and Northern Ireland face the biggest increases
The average annual car insurance premium rose by £100 in 12 months to a three-year high of £629 a year.
This 19% increase over the past three months means motorists across the UK are now paying the highest price for their car insurance in three years, according to data from Confused.com.
In fact, £629 is just £34 a year less than the most expensive car insurance price on record.
On the rise: Car insurance premiums rise again after two years of falling prices
Half of all drivers saw their car insurance premiums rise in the last quarter, Confused.com said, rising by £46 on average.
Male drivers now pay £672 a year, a 19% year-on-year increase, or an additional £105.
Motorists are now paying £557 for car cover, also a 19 per cent increase, with prices £90 more than at the same time in 2021.
The regions with the fastest rising car insurance prices are Central Scotland, Northern Ireland and Central London, all of which suffered price increases of 22%.
The 22% increase in premiums for Inner London drivers means they now pay the most for car cover and pay £183 more than at the same time last year.
This brings the average premium in the region to £1,008 – with prices topping the £1,000 mark for the first time in over five years.
Capital cost: The price of car insurance is rising across the UK, with motorists in London paying the highest prices
Young drivers have seen the biggest increase in auto insurance costs, with premiums for 18-year-olds rising by £307, or 22%, in the last 12 months. This puts the average premium for drivers of this age at £1,715 per year.
Confused.com Managing Director Louise O’Shea said: “We are living in financially difficult times.
“And like everything else, the cost of car insurance is rising rapidly and it will hit us all hard.”
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Why are auto insurance prices rising?
The increase is due to several factors. In part, the increase is a return to pre-pandemic norms. In the worst of the lockdowns, car insurance prices fell as insurers paid fewer claims for fewer journeys.
The UK’s return to a pre-Covid lifestyle has led to more car journeys, more thefts and accidents and therefore higher premiums.
Regulation is also part of the reason motorist insurance costs are rising. Last January, insurers were banned from a practice known as “price walking”.
Price walking occurs when insurers charge renewing customers more in order to charge new customers less.
The ban has led to higher premiums for all drivers, despite the Financial Conduct Authority regulator’s claim that it will save the public £4billion over the next ten years.
However, the FCA made this prediction before the cost of living crisis started, and it is another reason why premiums are rising.
Insurers’ own costs increase and these are passed on to their customers. Energy costs and the cost of items such as car spare parts are rising, which also explains the rise in car insurance prices.