Motor Insurance premiums are increasing
This is not due to an increase in the number of claims because claims haven't risen. It is not either due to increased expenses in car repairs. As modern cars designed for cheap, quick repair (like the Ford Focus and Peugeot 306) become more widespread, costs should fall.
Nevertheless most insurers paid out £1.20 in claims for every £1 of premiums they received. Insurance companies need to at least break even.
No win no fee culture increases motor insurance premiums
In the US there has been a huge increase in injury claims, by solicitors working on a 'no win, no fee' basis and this has hit motor insurers hard. As has a change in the law since Labour came to power whereby the health service can reclaim up to £10,000 in treatment costs from the driver at fault. This is good for the government, which can keep taxes down, but the burden of cost falls on the motor incurrence companies. What will this mean for future car insurance premiums?
Motor insurance brokers are cheaper
A quarter of policyholders renew their motor insurance at the end of the year without comparing quotes. It is therefore important to shop around. Remember, the price of a typical fully comprehensive policy is rising at 20 per cent or £100 a year, Quality brokers such as insure your motor will rebroke your insurance renewal which means they will offer it to the market so that they can offer you the best price.
Insurers arrange a wide mix of discounts to attract business, and many give the best deals to new customers rather than existing ones. Research shows that companies such as Direct Line, Tesco Insurance, Admiral and Norwich Union Direct cost 20% more at renewal than at new business, so if you are an existing customer, you may not benefit.
Insurance companies are forever tinkering with the way they assess risks, based on the number and types of claims paid. You may live in the same house, have the same job and drive the same car as you did then but changes with the insurers risk assessment criteria can mean they may not want your business as badly. Old customers might therefore not be as desired as new ones in their eyes.
The cheapest quote might be too most expensive in the long term!
Insurance companies will some times cut premium prices, but then charge big extra fees if you decide to vary the policy, for example by adding drivers or changing the car, after a few months. It is possible; some will arrange a loan car quickly after an accident and arrange for yours to go for immediate repair.
Insure your motor for example offers all customers a guaranteed courtesy car in the event of uninsured losses. Others such as the Admiral group including Diamond offer nine-month bonus accelerator policies, which whilst being cheap do not allow the customer a full no claims discount.
