Car insurance costs are continuing to race ahead rising 13.5% in the past year to an average £788, new research from insurance market research experts Consumer Intelligence shows.
A combination of another rise in Insurance Premium Tax to 10% – which takes effect on October 1st – and increased claims is driving the rise in premiums.
But Consumer Intelligence’s figures – used by the Government’s Office for National Statistics to calculate official inflation statistics – show huge differences across the country and between age groups.
Drivers in the North West and London are paying up to 50% more than the national average – the average bill is £1,177 after a 17.3% increase in the North West and £1,068 in London after a 16.7% rise.
Younger drivers are paying the highest bills – average premiums for under-25s are £1,831 although prices are rising slightly slower than average at 9.4%.
Older drivers are seeing higher price rises at 15.3% but their average annual bill as calculated by the five cheapest premiums is just £348.
Younger drivers are seeing some benefit from telematics – so-called black box technology – which rewards safer driving with lower prices. Around 55% of the most competitive premiums for under-25s come from telematics policies. Just 8% of the best deals for those aged 25-49 come from telematics.
Consumer Intelligence’s data shows the cheapest place to insure a car is Scotland where average premiums were £562 which is around £40 cheaper than the second lowest; Wales at £605.
Ian Hughes from Consumer Intelligence said: “The latest increase in Insurance Premium Tax which takes effect next month as well as rising claims are driving the rise in premiums.
“We are seeing a real acceleration in shopping around and all customers need to ensure they are receiving the best value for money from their insurer which should be easier as providers need to make it clear what last year’s premium was when they send renewals.
“Under-25s who pay the highest average premiums at £1,831 need to seriously look at black box technology as a way of limiting price rises but can take some comfort from the fact that prices are still lower than they have been.”
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