Is This The End Of The Road For Cheap Car Insurance?
The sharpest premium rise in five years and a tax hike looks set to make motorists matters worse.
Motor insurance prices are on the rise and the new Insurance Premium Tax hike looks set to continue the trend, Confused.com claims.
Biggest rise in five years
The price comparison website says that in the third quarter of 2015, the typical cost of a comprehensive policy reached £629 - representing a rise of £47 compared to the same period in 2014, a rise of 8%.
Prices fell for 12 consecutive quarters from the start of 2012 to the end of 2014. However, the research shows that declining premiums are coming to an end. The rise between July and September is the sharpest rise since 2010.
At the start of November, IPT (Insurance Premium Tax) rose from 6%, to 9.5%. Announced in July by George Osborne in his Summer Budget, the tax is added to everyday cover such as pet, household and medical. However motorists will be the hardest hit with over 7.3 million affected.
With the average motor insurance premium costing around £629 per year, the tax rise is likely add about £20 on top of that.
Young drivers spared
Older motorists took the brunt of the rises in the third part of 2015. The typical cost for a 68 year old reached £439, which was £59 higher than the same period of 2014, an increase of 15.3%. Furthermore, a 60 year old typically paid £393 rather than £364, an increase of 8%.
Perhaps most interestingly, and despite the fact youngsters shell out the highest premiums, younger motorists were spared a significant rise. The typical outlay for a 17 year old totalled £1,916 which was only £6 higher than 2014 (+0.3%).
Days of cheap car insurance are over
Steve Sanders, Confused.com Finance Director, concluded: “It would seem that the days of cheap car insurance really are over. We’re seeing substantial increases in prices for most UK motorists, with only the very youngest of our driver profiles being relatively unaffected.”
He added: “And with the government’s increase in insurance premium tax we’re likely to see continued inflation in car insurance prices across the rest of 2015 and into 2016.” Mr Sanders advised: “Our advice to all drivers is to shop around (to get) “the very best prices without compromising on levels of cover.”