Car insurance premiums rise to a two year high

Average car insurance premium prices have been rising at a startling rate over the past three months, beating the record increases seen in 2011 when average premiums hit a record high of £554, according to analysis by MoneySuperMarket.

Although the average car insurance premium price at the end of November was £456, the increase in prices has been dramatic, with a 15 per cent rise since the end of August, equating to £60 on an average policy. In comparison, the last time prices rose so quickly, between January and April 2011, there was a 10 per cent rise.

Kevin Pratt, insurance expert at MoneySuperMarket.com says: “Motorists have benefited from competitive pricing in the insurance market recently, but it looks like low costs are a thing of the past, as motoring cover has been steadily creeping up since August this year. Premiums in November averaged out at £456, the highest we’ve seen since December 2012 when premiums were at £465. Premiums are 10 per cent higher compared to this time last year, and are increasing rapidly – November saw an uplift of £25 from October.

“Although average premium prices aren’t at the record levels we saw in the first quarter of 2011, it is worrying that we have seen car insurance premium inflation running at a higher level that we saw then. However, according to our data, premium prices do rise towards the end of the year but if this inflation continues, we could see average premiums break the £500 mark in 2015.

“Premiums have been falling since 2011 because of competition between insurers. But prices can only go so low before they start losing money, which is when prices start to creep up again. That’s no consolation to hard-pressed motorists, though – which is why drivers need to stimulate as much competition as they can by actively shopping around every time they renew.

“Some insurers trimmed their prices in expectation of significant falls in fraudulent claims, but despite moves to limit false or exaggerated claims associated with whiplash, criminals are still costing insurance companies millions of pounds every year – and it’s honest motorists who are picking up the bill. It is to be hoped the government keeps its foot firmly on the neck of insurance fraudsters so that this inflationary pressure is eradicated once and for all.

“As car insurance prices continue to rise, it’s more important than ever that motorists shop around for cover, to ensure they’re getting the best policy for their money. Many drivers are being stung on renewal costs, which are often more expensive than alternatives on the market, so it really does pay to shop around for cover to find the best value cover for you. The average saving made by drivers using MoneySuperMarket is £237.”