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The United Kingdom is witnessing an unprecedented surge in car insurance premiums, leaving many drivers grappling with financial strain.
According to recent reports, the average cost of comprehensive car insurance has skyrocketed by as much as 58% within a year, with the average policy now costing £924. (Confused.com)
This article delves into the factors contributing to this steep rise and its impact on various demographics.
One of the most significant contributors to the rising cost of car insurance is the increasing popularity of electric vehicles (EVs). While EVs are lauded for their environmental benefits, they come with a downside—higher repair costs.
The specialised parts and expertise required for EV repairs have led insurance companies to hike premiums, affecting not just EV owners but the entire driving population.
The easing of COVID-19 restrictions has led to a surge in road traffic, and consequently, an increase in insurance claims. Insurance companies are offsetting the costs of these claims by raising premiums.
This rise is also attributed to the increasing cost of car repairs, which has escalated by a third over a year to £1.5 billion, as per the Association of British Insurers.
The Financial Conduct Authority introduced new rules in 2022 aimed at ensuring fairer insurance prices. However, these regulations have not significantly impacted the soaring costs. While the intention behind these rules is commendable, their effectiveness in curbing unreasonable price hikes remains questionable at this stage.
The rise in insurance premiums is not uniform across the board. Drivers in Inner London have been hit the hardest, witnessing a 61% increase and paying an average of £1,503.
Gender disparities are also evident, with male drivers generally paying more than female drivers.
The most affected demographic, however, is young drivers.
Eighteen-year-olds are now paying an exorbitant average of £2,995 for car insurance. (Confused.com)
Given the financial burden imposed by these rising costs, it's crucial for drivers to adopt coping strategies. Shopping around for better deals, increasing voluntary excess, and paying for insurance annually are some of the tips provided by industry experts.
At GAPInsurance123 we currently offer some of the lowest premium prices for Motor Excess Insurance to cover excess costs on car insurance products.
Across all the brands we offer this Motor Excess Insurance product (TotallossGAP.co.uk, EasyGAP.co.uk and GAPInsurance123) we have seen a six-fold increase in the sales of car insurance excess protection in 2023.
It would appear that owners are looking to mitigate their car insurance premiums by opting for a higher level of compulsory and voluntary excess. They then can mitigate this risk by protecting this by taking motor excess cover.