MOTORISTS are being warned to prepare for increased insurance charges this year.
Industry trade body the Association of British Insurers (ABI) warned that there are signs that premiums are rising from their six-year low.
1
Households are already braced for rising bills and an increased cost of credit after the energy price cap and interest rates were both hiked this month.
Yet another bill may also be on the rise.
Insurance trade body the ABI is warning motorists that car cover costs are creeping up as providers struggle with increased claims, a shortage of parts and new Financial Conduct Authority (FCA) charging rules.
It comes as the ABI’s latest motor insurance premium tracker found that the average price paid by motorists for car cover actually hit a six-year low in 2021.
Drivers were typically paying £434 to insure their car.
This was down 7% on 2020 and the lowest level since 2015.
Most read in News Money
But car owners are being warned that the road ahead isn’t so smooth and they should strap in for increased costs.
The ABI’s research identified that the average car insurance premium actually rose by £11 during the final three months of the year to hit £440.
This was still 3% lower than a year before but the trade body warns there are signs of more increases ahead.
One factor , the ABI, said, is increased claims.
Between 2015 and 2020, the average amount paid for damage to policyholders’ vehicles increased by 59% and the average paid to third parties for damage to their vehicles rose by 32%.
With road traffic returning to pre-lockdown levels, claims are also expected to rise, the ABI said.
The ABI said the supply chain crisis is also hitting insurers, making it harder to access spare parts to fix vehicles.
The warning comes as the FCA introduced new rules on January 1 that banned insurance companies from charging existing customers more than new ones.
The ABI’s Laura Hughes said the FCA pricing rule changes may lead to fewer introductory discounts.
How to compare car insurance
PAYING your car insurance can be a stressful time.
It’s a legal requirement to have car insurance and going without it could land you with a £300 fine, six penalty points on your licence and even a criminal conviction.
But before you automatically renew with your current provider, make sure you compare prices to ensure you’re on the best deal.
There are dozens of reputable websites where you can check prices, including Compare the Market and Go Compare.
Once you’re done, the websites will then show you the quotes you can get some different providers.
If you find a better price, go back to your insurer and tell them what’s being offered elsewhere.
While no means a guarantee way to lower the price they’re offering you, haggling doesn’t cost a penny and can prove successful.
If they can’t lower their price, then you can leave them and go with the cheaper deal.
Also remember to check insurance prices directly with Aviva and Direct Line as these insurers don’t feature on comparison websites.
Once you’ve found your perfect deal, do a check on Quidco and TopCashback to see if you can also earn cashback on top.
She said: “While we expect the motor insurance market to remain highly competitive in 2022, rising costs for parts, repairs and other supplies and services will continue to put pressure on premiums for motor insurance for both new and existing customers.
“Insurers appreciate that many households are facing a cost-of-living squeeze with rising household bills as costs rise in other areas of the economy, and they will be doing all they can to ensure competitively priced motor insurance, in the face of the variety of cost pressures faced.”
There are already warnings that car insurance has gone up £64 since the price rule changes.
According to Compare The Market, shopping around for car insurance could save you £262 annually.
Meanwhile, renewing your insurance exactly 20 days before the expiry date could save you an average £306.
We pay for your stories!
Do you have a story for The Sun Online Money team?
