UK drivers are paying more than ever before for their car insurance as a result of the rising cost of repairs, tax and personal injury claims.
The average price for comprehensive insurance in the fourth quarter of 2016 was £462, which is 4.9% higher (and £22 more expensive per policy) than the same period in 2015, according to the Association of British Insurers (ABI).
Repair costs are a big factor in the rise of insurance premiums. The average repair bill has increased to £1678 over the past three years, a rise of almost 32%. Electronics, safety aids and fuel-saving systems fitted to modern cars can all prove complex and expensive to repair, with specialist tools and knowledge often required.
Insurance premium tax has been rising since the July 2015 Budget. The latest increase in June this year will double it, from 6% to 12%, which also affects the cost of insurance for drivers.
In addition, personal injury claims are on the up. The government is aiming to crack down on fraudulent whiplash claims, but the average personal injury pay-out still remains high, at £10,674. The government’s plans could save around £1 billion, which would reduce every motor insurance policy by £40.