The average cost of a comprehensive annual car insurance policy rose in the final quarter of last year. It went up by 2.7% – to £609.93 on average. This evidence comes from the AA’s British Insurance Premium Index. This is the first time that the average cost of an insurance policy has risen for several quarters.
Why has this happened though? Why, despite drops in the other three quarters of the last year, did average premiums rise in the last quarter? The answers are not simple ones. Primarily, insurance prices rise if insurers think it will be more expensive to make sure they can pay out on the claims they need to.
One of the reasons is that modern cars are much more complicated to fix than older cars. Car problems are increasingly not mechanical, but digital in origin. This means that there are fewer people capable of fixing many cars. In turn, that makes fixing many cars much more expensive.
Compounding this, most insurers are also cautious about the potential future effects of Brexit on the economy and the value of the pound. A less valuable pound will make fixing cars and paying out on insurance claims more expensive for insurers.
Does this mean that you are certain to pay more on your insurance premiums? While the chances are greater than they have been before, it is not certain. Where you get your insurance from makes a big difference. Insurance brokers search the market as wide as they can, which means that they are often able to find better deals than consumers can.