News

Do Car Insurance Premiums Go Down?

Do car insurance premiums go down?

You may have seen your motor insurance premiums and car insurance quotes jump by a significant amount in the last year. This may have caused you to think, ‘do car insurance premiums go down?’.

According to the Association of British Insurers (ABI), their Motor Insurance Premium Tracker which analyses nearly 28 million motor insurance policies sold each year, showed that in Q4 (October to December) 2023, the average premium paid for privately-owned vehicles was £627. This was a 12% increase from Q3.¹

One of the primary reasons as to why the insurance price of your vehicle has risen can be linked to repair costs which have increased by 32% in Q3 of 2023 to a massive £1.6 billion. The second factor affecting higher premiums is a higher theft rate.²

Add to this a rise in extreme weather and increasingly poorer roads, and the result is insurers struggling with spiked claim costs, with some operating at a loss (data shows that in 2023 motor insurers paid out £1.11 in claims and operating costs but received £1 in premiums.³

Why are car parts increasing in price?

The ABI reported a 16% increase in materials from Q2 to Q3 in 2023. In the same period there was a 15% rise in the cost of labour and 46% jump in related costs linked high energy rates.⁴

If you have an accident and your car is a write-off or damaged, it could cost significantly more to replace or repair it. This is linked to the rising cost of materials and labour used to make cars and car parts, partially due to the impact on manufacturing from the invasion of Ukraine and partially due to the pandemic and issues with supply chains and distribution.

With soaring energy costs, and the cost of key components higher than they were during Covid-19, the vehicle production and repair sector is facing a significant amount of financial pressure which is often passed on to the consumer. High repair and replacement costs also impact on the cost of car insurance, with insurers working to balance increased payouts and manageable premiums.

Labour shortages

Brexit has led to labour shortages within the UK, which in turn has been partially responsible for supply chain issues. Between 2020 and 2022, the number of people from the EU working in the wholesale vehicle retail and repair sector dropped by 1.73%, and the workforce from non-EU countries fell by 0.46%. This meant that over 100,000 EU workers and 17,000 non-EU workers were lost to migration caused by Brexit, which has been a contributing factor in delayed production and repair costs.⁵

Increased Theft Rate

Vehicle thefts increased by 35% towards the end of 2023, ⁶with a car stolen every 8 minutes.⁷ This development has been linked to a range of influences and factors:

Economic Factors: The high cost of living linked to rising interest rates, inflation, and soaring energy costs can contribute to a rise in motor theft.
Technological Advancement: While advancements in technology often improve car security systems, criminals match technological progress by cloning keys and using advanced hacking techniques to bypass keyless entry systems.
Market Demand: Certain makes and models such as Ford Fiestas, Land Rovers, and Range Rovers are in high demand. The vehicles and their parts are sought after both in the UK and internationally, making them a target for organised criminal networks who steal cars and parts for sale on the black market.

Weather and Roads

Severe weather events such as floods and storms can cause accidents, and damage to vehicles, which can lead to a higher number of claims. Poor road conditions can also damage vehicles, and again lead to an increased number of claims, which can contribute to the higher cost of premiums as insurers battle to keep costs down and manage a higher number of payouts.

How Can You Manage the Cost of Your Premiums?

Some of our clients ask: ‘Do car insurance premiums go down in certain cases?’

Driving down motor insurance premiums is a goal shared by many drivers, as it directly impacts the cost of owning and operating a vehicle. While insurance premiums are influenced by a variety of factors, there are several strategies that you can employ to help reduce these costs. These strategies involve a combination of responsible driving habits, informed decisions, and leveraging available technologies.

Adopt Safe Driving Habits

One of the most effective ways to lower motor insurance premiums is by adopting and maintaining safe driving habits.

Avoid Speeding and Reckless Driving: Speeding, aggressive driving, and other reckless behaviours increase the likelihood of accidents. By adhering to speed limits and practicing defensive driving, drivers can avoid incidents that could lead to higher premiums.
Minimise Distractions: Distracted driving, such as using a mobile phone while driving, is a significant contributor to accidents. Staying focused on the road reduces the risk of accidents, which can help keep insurance costs down.
Avoid Drink-Driving Convictions: Driving under the influence of alcohol or drugs not only endangers lives but also results in hefty fines, legal repercussions, and substantial increases in insurance premiums. After a ban and a driving conviction that a drink drive leads to, you could also face a significant increase in insurance costs.

Increase Your Excess

Choosing a higher excess (the amount you pay out-of-pocket before your insurance coverage kicks in) can lower your premium significantly. A higher excess reduces the insurer’s risk, which can be passed on in lower monthly or annual payments. However, it is essential to ensure that you can afford the higher excess in the event of an accident or claim.

Choose the Right Vehicle

The type of vehicle you drive has a significant impact on your insurance premiums. Certain cars are more expensive to insure due to their higher repair costs, likelihood of theft, or safety record. When buying a vehicle, it’s important to consider how the make and model will affect your insurance costs.

Choose Vehicles with High Safety Ratings: Cars with advanced safety features, such as anti-lock brakes, airbags, and collision avoidance systems, are potentially less likely to be involved in serious accidents. Insurers often offer discounts for vehicles equipped with these features.
Consider the Vehicle’s Age: Older vehicles may be cheaper to insure because they have lower market values, which means potentially lower payouts for the insurer in the event of a loss. However, older cars can lack modern safety features, so this must be taken into consideration.
Factor in security and theft rates: Insurers will take into consideration the theft rate of your type of car and anti-theft systems on your vehicle, including security alarms and locking systems, especially if your car is a more expensive make and model. Where you park your car overnight will also be a factor when it comes to determining your premium.

Frequently Asked Questions

Can Penalty Points Influence Car Insurance Prices?

Insurance companies can vary in terms of criteria and their policy around penalty points, with one insurer viewing penalty points differently from another. The following factors can give an indication as to what could affect your insurance:

If you already have points on your licence, your insurer could view you as being an unreliable driver, prone to issues around the handling of your vehicle and behaviour on the road. As a result, your insurance premiums might increase.
The more severe the driving offence, the more likely you are to see price increases around your insurance. Offences such as drunk driving and speeding could impact on the cost of your premiums.

By How Much Could the Price of Your Premium Increase?

Driving when using a mobile phone could result in an average premium increase by over 50% for 1-3 points. If you have more than one conviction, your premium could rise by just over 70% and more than 7 points for this type of offence could be a huge increase of 174%.⁸

For speeding offences with 1-3 points, the average increase on your insurance could be around 34%. For 4-6 points, you could see an increase of over 50%, and a 94% increase for 7 or more points on speeding-related offences.⁹

Before you lose hope, talk to us. We take into consideration the type of driving offence, the number of points, and how long you have had the points on your licence. With accurate information, we can connect with a wide range of leading insurers to potentially get you the cover you need.

How Can You Help Reduce the Costs of Your Motor Insurance?

There are several steps you can take to potentially help lower the price of your premium, including:

Paying a higher voluntary excess (the amount you financially contribute towards a claim) can help lower premiums.
Insurers see lower mileage as lower risk. Choosing a policy with limited mileage could help reduce the cost of your premiums.
Improve vehicle security by installing alarms, immobilizers, or tracking devices. Insurers like vehicles that present a lower risk of getting stolen. Increasing your vehicle security can potentially help lower premiums.

Lowering motor insurance premiums requires a proactive approach that combines personal responsibility, informed decision-making, and the strategic use of available resources, such as an experienced insurance broker. By adopting safe driving habits, choosing the right vehicle, and regularly reviewing and adjusting your policy, you could reduce your insurance costs.

If the cost of your motor insurance has increased, talk to us. We’ll try to find cover that suits your budget and requirements, and make sure you and your vehicle are properly protected.

Click here to request a quote.