Car insurance costs jump by two-year high but coronavirus could drive down premiums

Monday, 20th April 2020, 2:00 pm
Updated Wednesday, 8th July 2020, 11:47 am

Car insurance costs jumped significantly in the last 12 months, climbing by their sharpest rates in two years, according to new data.

Figures from two of the country’s largest comparison websites show that premiums rose throughout 2019 and into the first quarter of 2020. However, there is hope that drivers could see some respite thanks to the coronavirus lockdown.

Figures from Confused’s car insurance price index show that premiums have increased by an average of £47 in the last 12 months - the fastest rate of increase in two years.

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According to its analysis of six million quotes, the average policy now costs £809 per year, up six per cent on the same time last year. Figures from Comparethemarket’s database show a lower average premium of £755 but a £47 increase between the last quarter of 2019 and the first quarter of 2020.

Women and young drivers hardest hit

Women and young drivers have been hardest hit by rises, according to Confused’s data. Female drivers saw the biggest change to their car insurance costs, with prices increasing by £53 (8 per cent) over the past 12 months. Young drivers saw a smaller proportional increase - six per cent - but the average 17-year-old is still paying £121 more than a year ago.

However, both sites predict that an unexpected impact of the coronavirus could have a positive effect on premium prices. With fewer cars on the road due to lockdown, the number and cost of claims has fallen, sparking hopes that insurers might pass their savings on to customers.

Louise O’Shea, CEO at Confused.com commented: “The fact that car insurance costs have increased is not the news we need especially right now. Year on year prices are up, but over the past few months they haven’t changed that much.

“However, as a result of the lockdown the majority of people are using their cars less, it is therefore likely that we will see some change to prices in the coming months as insurers adjust to reflect this. We are constantly monitoring the situation so that we can update our customers on any changes that happen.

Dan Hutson, head of Motor Insurance at comparethemarket.com, added: “While the impact of the coronavirus is still unclear, the reduction in car usage could result in a reduction in premiums around the UK.

“The Government has reported a near 70 per cent reduction in motor vehicle use across the country. With mileage reducing, this is likely to result in significantly fewer claims which could in turn mean that insurers can offer lower prices to consumers.”