The average driver now pays £511 a year for insurance, a record high according to official data.
The price of typical car cover rose 7 per cent, or £39 a year, from the first three months of 2023 to the second quarter, according to the Association of British Insurers.
The trade body said the average premium paid by motorists renewing their cover rose by £36 to £471, while the average premium for a new policy was up £21 to £566.
The distinction reflects the different risk profile of new and renewing customers. For example, a new customer may be more likely to be a younger, less experienced driver.
Hard to fix: Rising car repair costs are being passed on to motorists by way of higher premiums
The ABI monitored the price of 7million motor insurance policies to come up with the averages, which are for actual premiums paid, not quoted.
Premiums are rising as car insurers pass on their own costs. In the first quarter of 2023 insurers paid out £2.4billon in motor claims claims, up 14 per cent in a year.
Meanwhile the cost of vehicle repairs leapt by 33 per cent over the year compared to the first three months of 2022, to £1.5billion.
This reflects rising costs, including energy bills, and the cost of more expensive repairs.
The ABI said the cost of replacement parts for many popular cars have increased between 12 -21 per cent over the past year.
Car repairers have faced a big hike in their costs, which they have passed on to insurers, and in turn to drivers.
For example, repairers have seen a 300 per cent rise in energy bills compared to before the cost of living crisis began in 2021.
The cost of providing a courtesy car has risen 30 per cent, and paint and part prices by 16 per cent.
Mervyn Skeet, ABI director of general insurance policy, said: ‘With many families facing higher cost of living bills, no one wants to see the cost of their motor insurance rise.
‘Insurers remain determined to ensure that motor insurance remains as competitively priced as possible, but this has become increasingly challenging, given the continued rising costs that they are facing.
‘We would urge anyone concerned about being able to afford their insurance to speak to their motor insurer to see what options might be available.
‘And despite cost pressures, it can still pay to shop around to get the policy that best meets your needs at the most competitive price.’
How to save money on car insurance
Shop around
This is the number one way to save on car insurance. Drivers can make savings of hundreds of pounds if they shop around when renewing their cover.
Insurers are no longer allowed to charge renewing customers more than new ones. That means if a driver renews, they should be quoted the same – or less – than if they had started a new policy with the same insurer.
But it may still be possible to get a better deal by shopping around.
Consider ‘black box’ telematics insurance
Black box policies are where the insurer uses a system in your car to monitor your driving, either a separate device or using the driver’s smartphone. These are designed to reward those who drive carefully.
They can cut premiums substantially once you start proving you are a good driver. Some insurers even offer an upfront discount if you take out a telematics policy.
Be careful about named drivers
Another way to cut premiums is to ensure that only regular drivers are named on the policy.
Adding a young, inexperienced driver can be a false economy, especially if you have a large or higher-powered vehicle.
The premium will be affected by the youngest driver, and he or she may not have a no-claims bonus.
Pay yearly if you can
When taking out a new policy, drivers will be given the option to either to pay for the whole year upfront or in monthly instalments.
Many opt for the monthly payments as it means not having to part with a large sum of money in one go – but if you can afford to pay your yearly premium upfront, you could save money.
This is because your insurer may charge you interest on the monthly instalments. It is worth asking them if there is a difference and, if so, what it is.
Only pay for what you need
Some car insurance deals include extra benefits, such as a courtesy car, windscreen cover, breakdown cover and motor legal protection.
All of these could definitely come in handy, but they will almost always increase the total cost of insuring your car.
Many consumers who buy add-on insurance then forget they have it, and some deals are only claimed on once every 664 years.
This post first appeared on Dailymail.co.uk
