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Adam Jolley

Motorists hit by 14% car insurance price hike

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The cost of motor premiums has increased sharply over the past year, according to new data, and the average annual policy now totals £671.

White car on money

Motorists are facing hefty increases in the cost of car insurance.

This is according to the latest Confused.com Car Insurance Price Index in association with Willis Towers Watson.

Cost of car insurance up £81

It found that, over the last 12 months, the typical comprehensive car insurance premium in the UK rose by 14%.

This means motorists paid £81 more on average in the first three months of 2016 than they did during the same period last year.

Thanks to the increase, the average annual policy now stands at £671, up from £590 in 2015.

A tough year

Despite the yearly increase in car insurance costs, there was some better news for motorists.

The first three months of the year saw no change at all in prices compared with the final quarter of 2015. 

This, coupled with a lower than expected increase in Insurance Premium Tax in the recent Budget, marginally softens what has been a tough year of ongoing price hikes.

Prices up around the UK

Motorists across the country have all been affected by rising prices over the last 12 months - every single UK region has seen double-digit annual price increases - and none more so than in Scotland. 

Drivers in the Hebrides have faced a mammoth rise in their car insurance costs of 28% annually – double that of the national average. 

Motorists in this region have also been dealt a second blow, with prices at the start of this year up 32% when compared with the final three months of 2015.

Despite these increases, London remains the most expensive region for comprehensive car insurance in the UK, with a typical annual policy costing £1,086.

 

Price Index regional graph

Men versus women

Both men and women have been hit by steep hikes in premiums over the last 12 months, experiencing increases of 15% and 12% respectively.

As a result, the average premium for a male driver now stands at £705 and £629 for a female driver. 

60-year-olds face biggest % rise

Motorists aged 60 have faced the highest annual percentage increase of any age group, with their premiums rising by 19%, equating to a £68 rise.

The last year has not been particularly kind to younger drivers either, with those in the 18 to 23 age group among those hardest hit. 

For these drivers, the annual rise in premiums has been steep, with all motorists in this age bracket experiencing a yearly real-term increase of at least £100. 

Meanwhile, 17-year-olds have had an easier ride, experiencing an annual increase of just 1% - the smallest percentage price hike of any age group. 

Despite this, a motorist this age can still expect to pay £1,919 for a typical annual car insurance policy. 

‘Vital to shop around’

Steve Fletcher, head of data services at Confused.com, says:

“The fact that comprehensive car insurance premiums have remained static over the quarter was not unexpected - insurers regularly cut prices in January, which has a knock-on effect for the remainder of the quarter.  

“However, these savings should not be taken for granted. Insurance prices have been rising at a steady pace for the last 21 months, and the last few months are unlikely to be indicators of a period of stagnation.

“With this in mind - and with the cost of motoring showing signs of increasing again - it’s all the more important that drivers find the cover they need at best price possible. 

“As ever, our advice to all drivers is to shop around at renewal to make sure that they are getting the very best prices without compromising on levels of cover.”

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