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Car insurance prices down almost a fifth

There's good news for cash-strapped motorists as the latest edition of Confused.com's quarterly car insurance price index shows the cost of cover has fallen for all drivers.

Car key on insurance policy document

The average annual cost of car insurance is down to £596 compared with £736 this time last year – a fall of 19.1%.

This is according to the latest quarterly Confused.com car insurance price index.

The index analysed more than 4 million quotes from between January and March this year to reflect what prices drivers have been paying for cover.

Cheaper car insurance for all drivers

This fall in car insurance prices is welcome news for motorists, particularly as average premiums have not fallen below £600 a year since 2009.

What's more, the index shows that the cost of cover has fallen for drivers of all ages, of both sexes, and across all regions of the country.

Car insurance prices falling by age

Drivers of all ages are reaping the rewards of cheaper car cover but young drivers have seen the biggest fall in prices.

For example, the average annual cost of cover for a 49-year-old motorist has fallen by 20.7% over the last 12 months – down from £644 to £510.

But 17-year-old motorists have seen prices fall by a whopping 38.6% over the same period – from £3,587 to £2,203.

The rise in drivers taking out telematics or black-box car insurance policies is one explanation for falling prices, according to experts.

With these policies, a small black box about the size of a packet of playing cards is fitted to your car to monitor driving behaviour such as acceleration and braking.

This information is then fed back to your insurer.

Telematics policies lower car insurance prices

By demonstrating responsible driving, customers can prove to insurers they present a low risk, and their premium - the cost of cover - is adjusted accordingly.

Telematics policies are particularly aimed at young drivers who typically have higher car insurance prices due to their higher risk of accidents.

Stephen Jones of insurance analysts Towers Watson says: "The frequency with which telematics providers are coming up with the cheapest quote, particularly for young drivers, is rising.

Car insurance price by sex

The fall in prices can also be partly attributed to the European Union (EU) Gender Directive.

This legislation forced insurers to stop using gender to set car insurance prices from December 2012.

In the past, because women have fewer road accidents than male drivers, women paid less for car insurance as they were less likely to make a claim.

But following this EU gender ban the gap between male and female premiums has narrowed.

Male motorists have seen a 17% drop in the cost of cover, down from £748 to £621 in the past year.

Meanwhile, female motorists have experienced a 22% price drop, with car insurance costs down from £721 to £565.

EU gender ban

But, as Gemma Stanbury, head of car insurance at Confused.com, explains, says some gender differences still exist.

"Although insurers can't set prices differently based on gender, there are many factors taken into account when calculating car insurance costs.

"For example, men typically drive more powerful cars which means their insurance would be more expensive than women's."

Car insurance prices by region

Drivers in Manchester and Merseyside have experienced the greatest fall in car insurance prices of all the regions of the country, with average annual premiums falling by 23% to £832.

However, it is still one of the most expensive UK areas for cover - outranked only by inner London, where average annual car insurance costs motorists £985.

Falling prices 'welcome news for motorists'

Stanbury said the fall in prices was "welcome news for motorists" but explained that prices wouldn't keep falling forever.

She said: "These ongoing drops in car insurance prices are unlikely to be sustained as insurance prices are cyclical.

"Prices peaked in 2011, when the average annual cost of car insurance reached £858, and since then the trend has been downwards but prices won't keep falling forever."

How to cut YOUR car insurance cost

Stanbury adds she would urge motorists to take advantage of these latest price drops as soon as possible.

"Don't simply accept your renewal price as your current car insurer may no longer be the cheapest option for you.

"We would recommend that drivers shop around for cover while prices are at their lowest to find the best deal."

What do you think?

Have you benefitted from the fall in car insurance prices?

We want to hear from you! You can share your thoughts on the message board below. 

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Naphtalia Loderick

Naphtalia Loderick

Naphtalia Loderick covers all things consumer for Confused.com. She started out on a weekly newspaper, via a national news agency and a stint in the fun but ‘not as glamorous as it appears on screen’ world of TV at the BBC researching consumer films for The One Show.

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