'My car insurance quote was double what I paid last year. It's outrageous'
How can you keep your premiums down as motor cover rockets? Motor cover costs are being driven up even faster than expected
Saturday 25 June 2011
Sophie Spooner's car insurance was due for renewal this week. Having been with Tesco Insurance for nine years the Cardiff-based PR executive simply expected to be able to renew with the same company. But she changed her mind when she got their quote for the next 12 months.
"The quote was almost double what I paid last year," she says. "I understand that new laws are in place and that lots of fake claims have cost the industry billions, but why would Tesco double my quote? I would have understood if they'd kept it the same price and not offered a discount, but no. It seems long gone are the days you get rewarded for being loyal."
Last year Sophie was charged around £450. This week Tesco's renewal letter increased the price to £885.16. "The worst thing is that when I shopped around, I found a quote about £200 cheaper. When I mentioned this to Tesco, the best they said they could get my quote to was £811."
Sophie was fuming after speaking to the insurer. "I've been with Tesco for nine years, ever since I started driving, and this is the first year they have declined to beat a competitive quote. It is outrageous!"
Many others are in for similar shock. The latest AA British Insurance Premium Index revealed that the average premium for an annual comprehensive car insurance policy is now £892, a rise of more than 40 per cent over the previous 12 months. The rise is the biggest annual increase ever recorded by the Index, which has been tracking the quarterly movement of car and home insurance premiums since 1994.
The average quote for a third party, fire and theft policy went up even more, climbing 82 per cent over the year to £1,532.62. But that reflects the fact that it's typically young drivers who buy that type of cover, according to the AA. In fact many insurers no longer offer third party, fire and theft policies.
The reason for these soaring premiums is an increase in fraud and injury claims, coupled with the effects on insurers of years of relatively underpriced, competitive cover. Simon Douglas of the AA says: "More people are withholding information when taking out a policy or exaggerating personal injury claims to reduce their costs. But this simply piles on costs for insurers and results in yet higher premiums for honest motorists."
He adds, though, that insurers are still making losses despite the sharp rise in premiums. One estimate suggests the insurance industry has been paying out £1.20 for every £1 they received in premiums, which clearly can't be maintained. The situation came about because new companies entered the motor insurance marketplace and wanted to build up a big customer base quickly.
The simplest way to do that was to offer cut-price premiums. But that forced the rest of the market to follow the downward trend in prices in order to keep customers. In the short term, that was good news for consumers. In the long-term something had to give, and now we're all being forced to pay more while insurers seek to recapture some of their lost profits.
Young people are being hit hardest according to research published by Confused.com this week. Newly qualified drivers can now expect to pay around £2,000 or more to insure a small hatchback. This time last year the cheapest premium for a new driver insuring a Ford Ka for a year was less than £900. Now the best quote has soared to more than £1,900, the comparison site says.
Andy Goldby, director of underwriting and pricing at Direct Line, says a rise in the number of personal injury claims is having a massive effect on premiums. "More than £2.7m per day is paid to personal injury lawyers," he says. "A fifth of every premium goes to pay for whiplash claims. Add that to the £44 due to fraudulent claims and £30 to cover the cost of uninsured drivers, and it's easy to see why people are having to pay more."
Goldby says that for the average driver, around 20 different rating factors are used to determine their premium, the key ones being postcode, age, driving experience, no claims discount, previous claims' history and whether they have had any driving convictions. But he warns: "Do not be tempted to mislead the insurer about any of these factors, as they can easily be checked and your claim may not be paid if you have acted fraudulently when you bought your policy."
So how can you combat the rising cost of insuring your car? Aviva suggests: "If you can, buy online. Currently we're offering offering up to 20 per cent discount to buy your motor insurance online. Second, consider adding your spouse as a named driver. Though it sounds counter-intuitive, you should get a discount."
Tesco advises: "Watch your mileage! Try to be a bit sparing with the number of trips you take in your vehicle if you can and be aware of the number of miles you do each year, as higher mileage may mean an increase in premium."
The insurer also says it's a good idea to fit a security system and mention it when you seek a quote. The same goes if you keep your car in a garage.
Direct Line says it's a good idea to look at the excess, the amount of money you are willing to pay in the event of an accident. The more you're willing to pay, the lower your premium. You should also ask if there are there any mandatory excesses for accidental or malicious damage. Many policies have a compulsory excess and sometimes a voluntary excess.
"Find the best type of policy for you," says Tesco. "Look for specific cover that applies to your lifestyle. For example, if you drive regularly on unmade roads you may want to ensure you have windscreen cover as standard on your policy."
If you have two cars, you could consider eliminating the courtesy car cover (if you have it), as you'll still have a car you can share if you lose the use of one of them. Incidentally, if you do have a second car, Aviva gives 15 per cent discount for each additional car you insure with it.
You could also cut premiums by changing your vehicle – especially if your current car is in a high insurance group. Higher performance vehicles cost more to insure as they're more attractive to thieves. So if you are about to buy a car it is worth looking at choosing one in a lower group.
Finally, if you can, pay your premium all in one go. That way you'll avoid insurers' finance charges.
A happy ending: Driving down costs
After The Independent's intervention, Sophie Spooner got a more affordable quote from Tesco and has now renewed with the insurer. Tesco said: "We are sorry that Ms Spooner was disappointed with her renewal quote and the explanation given to her during her first call.
"During the policy term Ms Spooner changed her vehicle from a Volkswagen to a Lexus and added an additional driver. Therefore, comparing the original premium against the renewal isn't comparing like-for-like.
"By making changes to reflect Ms Spooner's current needs we were able to reduce her premium. We apologise for the initial disappointment caused."
Cutting prices by cracking down on uninsured drivers
* A clampdown on uninsured drivers which came into effect on Monday, should help to cut the cost of car insurance for all. Since 20 June owners of registered vehicles must declare their car as being off the road if they want to avoid the need to buy insurance.
Before Monday, offenders had to be caught in the act of driving without insurance to be prosecuted. Now, registered drivers who are found to be uninsured will be sent a warning letter, followed by a £100 penalty.
If a car still remains uninsured, it can be clamped, or seized and destroyed, or the owner could be taken to court and given a fine of up to £1,000.
"The new legislation which came into into force this week should help drive down the number of uninsured drivers on our roads," says Peter Harrison, Moneysupermarket's head of car insurance.
"It also means all motorists need to be vigilant of their insurance renewal dates – especially leisure drivers or motorbike enthusiasts who only use their vehicles occasionally and let their insurance lapse in the meantime. They need to declare their vehicle as SORN (Statutory Off Road Notification) or renew their policy!"
You can make a SORN online at www.taxdisc.direct.gov.uk/EvlPortalApp or by calling 0300 123 4321. Either way you'll need to use the reference number shown on your V5C registration certificate, V11 or V85/1 reminder form.
Rain doesn't stop profits at Andy Murray's £600-a-night hotel Cromlix House
Think twice about investing in fine wine - it's a vintage ploy for the fraudsters
Have you checked your pension? Make sure you're not sleepwalking into problems later in your life
Top-five practical tips for parents when planning for their child's future university education, tuition fees, and cost of living expenses
Santander's Kitti app aims to bring the good old cash kitty into the 21st century
- 1 National Orgasm Day: Six reasons (plus one bogus one) why they're good for us
- 2 The 'world's most beautiful vagina' has been debunked by science
- 3 John Green schools morning show hosts after awkward interview with Cara Delevingne
- 4 Doctor Who: Christopher Eccleston says why he left the BBC series after just one series
- 5 'Rowdy' Roddy Piper dies: Wrestling legend dies aged 61, according to reports
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn – or a return to a Labour government
Labour leadership contender Jeremy Corbyn says 'we can learn a great deal from Karl Marx'
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Public anger after French sunbather beaten up by gang for wearing a bikini in Reims park
Labour leadership: New poll shows party is now even 'less electable' than under Ed Miliband
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...
£13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...
£22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...
£35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...
Day In a Page
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
With five bedrooms, this spacious home offers beautiful gardens and modern interiors - set within the popular market town of Bingley.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This first-floor flat comes with two bedrooms, an impressive open-plan reception room and two lovely roof terraces.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Moored at Taggs Island and reached via a pretty garden, this two-bedroom houseboat has a vaulted reception room and skylit garden studio - currently a beauty salon.
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
A contemporary house spread over three storeys, this three-bedroom detached home has large sliding doors that open out to the River Quaggy.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
This former village bakery, dating back to the 17th century, is now a three-bedroom detached home just a few miles from the East Sussex coast.
On the picturesque Isle of Man, this four-bedroom character home has a ground-floor shop that's currently run as a newsagents and a flat that would make an ideal holiday let.
In a new collection of flats, this first-floor two-bedroom apartment offers ample entertaining space and a prime view of Furze Green from a private balcony.
This three-bedroom stone-built cottage currently trades as the village store with a restaurant in the annexe and family accommodation on the upper floors.
Previously two semi-detached properties, this five-bedroom home is spread over three floors with a large breakfast kitchen, orangery, office and gym on the second floor.
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B or countryside retreat, subject to change of use permissions.
This Grade II-listed three-bedroom home is situated on a private road, just a short walk from the sandy beaches of Frinton-on-Sea.
Less than five miles from Malmesbury, this four-bedroom cottage comes with equestrian facilities and gardens that extend to approximately three acres.
Spanning three storeys, this late-Victorian five-bedroom farmhouse is a spacious family home with a modern interior and B&B potential.
With an original church arch, this triplex one-bedroom church conversion has a light, spacious, feel and comes with a secure off-street parking space.
This recently-refurbished three-bedroom home has bi-folding doors that lead out to a decked seating area - ideal for alfresco dining this summer.
Well-located for coastal walks and popular restaurants, this detached four-bedroom home offers views over farmland, to the Solent, the Purbecks and Bournemouth.
If you love high ceilings, school conversions like this one are bang on the money. This two-bedroom flat is minutes from Burgess Park and the foodie haven at Borough Market.
Set within a church conversion in Bermondsey, this two-bedroom maisonette combines existing features, such as original arches and brickwork, with a contemporary finish.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.