The cost of car insurance in parts of the UK has soared by more than 25 per cent over the past 12 months with motorists in Manchester suffering severe hikes.
Drivers in the north west of England have been hit hardest, with motorists in Manchester facing a rise in comprehensive premiums of 26.6 per cent in the 12 months since September 2010, according to the latest Confused.com/Towers Watson Car Insurance Price Index.
This compares to a national average increase of 12.3 per cent in the cost of cover over the same period.
This means the typical price of a comprehensive motor policy taken out by a Manchester motorist between between July and September is £1,361 – 60 per cent higher than the UK average of £843.
Five years of price increases
In the past five years, the cost of cover in the city has more than doubled. At the end of 2006 an average annual policy cost just £671.
It's not just Manchester that has been experiencing huge insurance price increases. In the Manchester/Merseyside region as a whole, comprehensive prices have risen 24.3 per cent over the past year to an average of £1,256.
When will these rises end?
The general picture around the UK is that the fast-paced premium increases of 2010 have slowed in 2011.
In fact, over the past three months, the cost of the typical comprehensive policy in Britain has fallen by 1.6 per cent.
But in the north west of England prices are continuing their upward path.
In the third quarter of 2011, the average cost of car cover rose 2.2 per cent in Manchester and by a little less across the Manchester/Merseyside area.
Third-party cover even more expensive
For drivers looking for a lower level of cover, the news is not good.
The typical cost of a third party, fire and theft policy in the UK now stands at £1,155 – almost 40 per cent higher than the average comprehensive premium. This represents a rise of almost 20 per cent across the country in the last 12 months.
But the picture in Manchester is even bleaker. The average third-party, fire and theft policy now costs a staggering £1,905 – up more than a third over the past year.
In the Manchester/Merseyside area, the same cover now costs a typical £1,790, also up a third in 12 months.
Why is comprehensive cover cheaper?
What might be happening is that higher-risk drivers – those with speeding convictions, or who have made expensive insurance claims in the last few years – are opting for a lower level of cover because, for them, comprehensive policies are too expensive.
So if more high-risk drivers are opting for third-party cover, the average price of such policies is pushed up.
The figures do not mean that, for any given customer, a comprehensive policy would be cheaper than third-party, fire and theft.
But if you are looking for insurance, don’t just assume comprehensive cover will be more expensive.
When you’re comparing prices, make sure you check both types of insurance to see what the difference in premiums is.
Price rises 'worrying'
Gareth Kloet, head of car insurance at Confused.com, said: “The year-on-year picture is quite worrying as some drivers are being hit with more than 25 per cent increases.
“Car owners in the affected areas are going to have to be as savvy as ever to find the cheapest and best deals for them by shopping around.”
To get an idea of how car insurance prices in your area have been affected, take a look at our interactive guide.
How to cut the cost
Despite the rising figures, there are a number of ways you can look to lower your car insurance costs:
Don’t overestimate your mileage
Mileage is one of the rating factors insurers use to calculate a person’s premium so it pays to spend a little time trying to estimate as best as you can how many miles you’re likely to drive each year. But bear in mind that underestimating your mileage could invalidate your insurance policy when it comes to making a claim.
Higher excess, lower premium
Consider a higher voluntary excess to cut your annual premium. This is an amount you choose to pay in the event of a claim. In return for opting for a higher excess, the insurance provider will usually lower the premium. But don’t forget that the voluntary excess will always be paid in addition to any compulsory excess.
Value your vehicle accurately
It’s incorrect to assume the higher you value your car the more money you’ll receive in the event of a claim. Insurers will only pay out the current market value of the vehicle so inflating the value of your vehicle serves no purpose other than increasing your car insurance premium.