Car insurance prices rise 13.5% ahead of tax increase
Car insurance premiums rose by 13.5% across Great Britain in the year to August, new data from Consumer Intelligence shows.
The market research agency, which based its findings on a basket of representative car insurance products (88% comprehensive policies, 8% third party fire and theft, and 4% third party), says the average car insurance premium cost £788 in August 2016, up from £696 the previous August.
On a quarterly basis, average premiums across Great Britain rose by 3.3%, while a 5.2% increase was seen over the past six months.
Consumer Intelligence blames the hikes on a combination of an increase in claims, as well as a forthcoming rise in Insurance Premium Tax (IPT) – as announced in this year’s Budget – which will see IPT hiked from 9.5% to 10% on 1 October.
Ian Hughes, chief executive of Consumer Intelligence says: “The latest increase in Insurance Premium Tax, which takes effect next month, as well as rising claims are driving the rise in premiums.
“We are seeing a real acceleration in shopping around and all customers need to ensure they are receiving the best value for money from their insurer which should be easier as providers need to make it clear what last year’s premium was when they send renewals.”
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Drivers in the North West pay the most
On a regional basis, drivers in the North West and London have been hit hardest, paying up to 50% more than the national average – the average bill is £1,177 (a 17.3% annual increase) in the North West and £1,068 (a 16.7% annual rise) in London.
In comparison, the cheapest place to ensure a car is Scotland, where the average cost is £562 (a 12.1% annual increase).
Unsurprisingly younger drivers are also footing the highest bills, with the average premium for under-25s at £1,831 - although prices are rising slightly slower than average at 9.4%.
Consumer Intelligence also points out that about 55% of the most competitive premiums for under-25s now come from telematics policies – also known as black box technology.
These boxes are fitted in your car where they analyse how you drive, using this data to calculate your premium.