/ Money, Motoring

Have you clocked your car insurance creeping up?

Two cartoon cars in a collision

Car insurance is a grudge purchase for many of us and sadly it’s not a cheap one. To further increase the burden, the cost of car insurance continues to creep up, but why?

With premiums on the rise we decided to take a look into what’s fuelling these hikes.

Premium price to pay

The AA reports that the average comprehensive car insurance policy stands at around £1,000 today, compared to £450 back in 2000.

And that’s not because our roads are getting more dangerous. In fact, we’re having far fewer accidents and, according to the Department for Transport, our roads are safer than they’ve ever been.

When we spoke to some of the biggest car insurers, we were told that the cost of claims makes up the bulk of your premium. More specifically, that fraudulent claims are a big part of the reason insurance has got more expensive. According to the Association of British Insurers (ABI), the cost of fraud to the insurance industry adds around £50 to every premium.

And fraudulent claims aren’t just a result of organised criminal cash-for-crash gangs; there is also a problem with opportunistic fraud where drivers exaggerate the impact of a crash. This is often fuelled by claims management companies which cold-call members of the public in the hope, for example, that they will file a whiplash claim to their insurer (even if they might not have suffered any injury).

The insurance industry is taking action to help curb fraud, with the ABI estimating that the industry spends £200m each year on fighting fraud.

It’s not just fraud that’s whacking up costs here. Customers are also absorbing the costs for insurers’ admin and overheads, as well as the hike in insurance premium tax.

Lightening the load

Fortunately, there are things you can do to reduce your insurance costs.

It’s worth spending some time working your way through our top tips for saving on car insurance – where we explain, for example, why it doesn’t make sense to auto-renew your policy and why it does make sense to ensure you set the right excess.

So, have you noticed your car insurance creeping up in cost over the years?

Our full investigation into car insurance costs appears in the August edition of Which? Money magazine.


A lot of what you are saying is quite right I get on average 2 calls a week from some cold call company who says ‘I am ringing about the accident you had in your car, they are surfing in the hope you are going to say that you had some form of accident and they will then offer to help on a no win no fee basis. The other thing Car insurers should make it a lot more difficult for the fraudsters and demand concrete evidence to support any claims they are suspicious of. As it is now, they seem to accept and pay out then pile the money on the premiums of decent car drivers. I now do exactly the same with my car insurance renewal as I do with my energy, quite simply search around. Last year the Insurer I was with [no names but there is a dog involved] put my premium up over £100, I had not had any accident or made any claims when I queried the increase they indicated it was down to their policy underwriters, needless to say I shopped around and found good savings with another reliable insurer. The other area where savings can be made is with your Insurer Legal Fee policy most want to charge around £25-£30 for this addition but if you look for a stand alone policy it can offer the same cover at a fraction of the cost your car insurer wants to charge you. in these what I can only describe as ‘rip off times’ the best policy with any type of insurance is not to except your renewal quote until you have shopped around the market place.

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I have noticed odd things happening with your icon lately Duncan. One day there was some text in the circle but I think that was during the broadband outage problems. Why not get yourself a nice avatar to present a distinctive image?

My avatar has appeared alongside other people’s posts in ‘Recent activity’ on various occasions in the past couple of months. Maybe a topic for the New Which? Convo Convo.

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Duncan – If you go to ‘Need help?’ in the banner across the top of the screen and click on the drop-down menu, the FAQ box will take you to the process. They call it a “Profile Photo” but it doesn’t have to be a personal picture – it can be any symbol or graphic that you like. There was once a brief discussion here about what people’s avatars said about them . . .

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This comment was removed at the request of the user

I wonder how much the cost of paying cashback adds to everyone’s policy. Even though I get on average £50-£60 a year back I’d be more than happy if that business was outlawed. If companies want to win new business, then maybe they should focus on offering good service and value for money, instead of cashback.

My car insurance premium for the forthcoming year will be £272.55 including breakdown and recovery cover.

I have changed insurer because of a large price hike. When I called my present insurer to say that I was leaving they said that if I had called back they might have been able to match the price. I told the rep that when I had arranged the insurance I had made it quite clear that (1) that my contact details must not be used by the company or passed to others, and (2) that if they did a price hike at renewal time, they would be informed that I had moved to another insurer.

I’m hoping that my new insurer is not greedy. They have been told that if they do a price hike at renewal, they can say goodbye to my custom.

I always look for cheaper insurance every time by using several comparison sites I always find a cheaper alternative This year when I rang my last year’s provider to say I did not wish to renew they did not even ask why or even said we might be able to reduce the price. They just said OK then That was a top car insurance company

I would like to see Which? telling us which companies do not indulge in the disreputable practice of charging existing customers more for renewal than they would charge a new customer.

Agreed – but it might be a very short list of names.

Also, a bit like the case with energy tariffs, anyone who changes insurer regularly will ride on the introductory discounts. In effect, the costs of their insurance will be subsidised by those who are either unable or unwilling to switch supplier.

I doubt you can prevent companies from offering “introductory discounts”. They want to increase their business and use loss-leaders to do so. They then hope to keep custom. It is up to us to be aware of these practises and, if we choose, renegotiating or changing the provider at renewal time. I have to negotiate with the AA every year. My insurance broker checks my car insurance each renewal and has recommended a change in 3 out of the last 4 years to save money for similar cover.

Many businesses do this to employees; start at an attractive salary but allow it to lag behind proportionally what they will offer newer starters. Life is tricky and you have to be aware of how it works.

I prefer to use companies that behave ethically, Derek. Any companies that became known for not pushing up prices for existing customers (obviously ones that had made no claims) would appeal to me.

I can remember when it was not necessary to change motor insurer to avoid price hikes. In fact my old insurer did not hike the price last year.

I used to use a brokers in the 70s and early 80s. One of them was a friend and he arranged preferential rates for a group of us who had kept in contact since our university days. When he moved out of insurance (and I landed up paying considerably more) he warned us that brokers often use a restricted range of companies and that it can be worthwhile for them to encourage customers to switch companies, presumably as a consequence of commissions. It certainly helps to know how the system works.

As a result of the recent failed attempt to hike my motor insurance I have discovered that a fellow trustee in a small charity has recently retired from working in insurance and is happy to advise me in future. He is less than impressed by the way that companies often treat existing customers.

Buying insurance is like buying another product – shop around. Companies will have different attitudes towards different groups. I look each year to check whether I am getting a fair (to me) deal for equivalent cover. I pay in the low £200 s. The insurance on the car I insure myself has increased by 10% in the last 6 years, with the same company. The one I insure through a broker (who charges a fee and only changes company if the premium is lower for the same cover) has increased by 13% in the last 11 years including the tax change.

You cannot generalise, can you? You need to check your own particular needs. One of my sons has used a broker for several years and achieved a good deal financially – double checking on “direct deals” just in case.

Clearly by what everyone is commenting we are all aware of how the Insurance industry seems to operate. It is certainly not loyalty driven and that is the reason why people should be aware and treat the industry with the same contempt as it shows you as an existing customer. It does not matter what you are renewing be it Insurances, Energy, etc. never accept the renewal quote until you have shopped around and compared prices and quotes, even if you have just won the lottery it is the principal of the way the industry treats you as a customer that matters.

I had motor ins with a well known company for years, which I used to renew on-line. Every year I used to receive a postal reminder which always inflated the price by about £50 (approx 16%), so I used to phone them to query it. Their response was always, ‘an on-line reduction does not apply to a postal reminder’. When I pointed out they were in fact sending a renewal notice for a policy that WAS bought on-line they would immediately reduce the charge to a reasonably acceptable level. Was that a try-on hoping I wouldn’t notice the increase, or was it an out and out a con?

This year’s renewal arrived with the usual inflated charge but when I phoned they said they were unable to reduce the cost by phone and I should look on the web-site for any on-line reductions. I went on-line but the price quoted was exactly the same as the postal renewal (to the exact penny) and it had gone up by nearly 20%! So, while on line I did a simple check on other company’s satisfaction results and compared costs, then I bought elsewhere for a couple of quid cheaper than I paid last year. I was a loyal customer but I’m not a loyal mug. We should all veto these companies with smug attitudes.

Car Insurers are still fleecing the public and the whole business appears to be a rotten egg,.I count myself lucky in that Aviva charge me only 80% of the next lowest provider but when getting in my quotes the most expensive was nearly 3 times the quote I accepted;
I found allegedly that Insurers pay no attention to the value of any car under £75000
so if all other factors are the same a car valued at £3000 is given the same quote as one for a car value £74000!That must need investigation