MOTOR insurance premiums dropped this spring for the first time in two years – with the average policy costing £622.
Figures released by the Association of British Insurers today found that the average cost of car insurance premiums fell by £12 in April to June, compared to £634 in January to March this year.
This is the first time in two years that motor insurance premiums have dropped.
But the average driver will still have to fork out over £111 more on their policy compared to the same time period a year ago when the average premium was £511.
Mervyn Skeet, the ABI’s director of general insurance policy, said: “After a very challenging period for insurers and customers alike, we’re encouraged to see an easing of increases to motor insurance premiums as claims costs stabilise.
“While this is good news, we need to continue our work focusing on claims costs, for the good of consumers.
“It remains a top priority for us and our member insurers.”
The latest figures from the ABI, which takes into consideration what drivers actually pay rather than quotes, come after premiums soared in recent years.
The average cost of a premium in the final three months of 2022 was £470, according to the ABI.
But by the first quarter of this year, that figure had risen to £635 – £165 more and a 35% rise.
Rocio Concha, Which? director of policy and advocacy, said: “It’s encouraging to see premiums starting to fall, and motorists will certainly hope this trend continues.
“However, with premiums rising significantly over the past year, many drivers opening their renewal quotes will still get a nasty shock.”
Insurers have blamed increased premium costs on above-inflation increases to repair prices, more thefts and soaring car production costs.
They also say it’s now more expensive and difficult to fix vehicles because of the rapid advance in vehicle technology.
And a shortage of skilled mechanics is further adding to insurance costs.
In total, insurers paid out £2.9billion in motor insurance claims over the last twelve months which also pushes the cost of premiums up.
While the average premium may be increasing, there are a few things you can do to save a bit of extra cash.
Automatically renewing car insurance might seem convenient, but it can often lead to missed savings.
In the month running up to your renewal, it is always best to shop around to see what other deals are available to you – particularly if your circumstances have improved since you last took out insurance.
The quickest way to start is to use a price comparison website.
These sites allow you to put your details in and then they search the market to find what products you may be eligible for.
Not all comparison sites have the same range of insurers, so it’s a good idea check two or three from GoCompare, Compare the Market, MoneySuperMarket and Confused.com.
Its also worth checking out Direct Line. As an insurer they don’t use comparison websites but sometimes have good offers.
You might really love your current provider – but that doesn’t mean you can’t save a bit of extra cash if you’ve done your research.
Insurance companies often provide incentives for customers to stay, so its worth looking for better deals elsewhere – and then taking them to your current insurer to see if they’ll match the offer.
Some jobs are seen by insurers as more risky than others so making small but accurate changes to your job title can save you money.
For example, swapping your role from “chef” to “caterer” can sometimes save you £20.
And changing from “fast food delivery driver” to “delivery driver” could save you £40.
Its worth noting, lying about your job could invalidate your policy, so make sure any tweaks are legitimate and accurate.
New cover becomes more expensive the closer you get to renewal. So if you really want to save some cash – start by saving the date.
You can buy your insurance up to 29 days before the policy start date and “lock in” the price you are quoted that day.
When setting up, you can usually choose your own excess, which can be as low as £100 and as high as £500 or more.
The higher your excess, the lower your premium and vice versa. This means you could lower the cost of your insurance by agreeing to pay more if you need to make a claim.
There’s all sorts of nifty gadgets on the market that ensure drivers behave a little more sensibly.
Black box policies are often popular as they accurately record the driver’s behaviour.
The device records a car’s speed, the distance it travels, how it accelerates and brakes and what time of the day or night it is used.
If you’re a careful driver, your behaviour will be taken into account when it comes to your premiums. But watch out – if you make risky decisions, your premiums will sky rocket
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