Cost of car insurance on the rise

Nationally in the last three months a new car insurance policy is up five per cent – £25 – and in the West Midlands it has risen by six per cent or £35 to £655.

The rises are the steepest since half way through 2017, according to the latest car insurance price index from Confused.com.

Louise O’Shea, chief executive at Confused.com, said: “Car insurance prices rising is not the happy news we wanted to start the year with, however it’s also not completely unexpected, as people resume their normal driving habits, and the cost of vehicle repair and replacement continues to increase.

“Although, customers who are shopping around are still receiving prices that are cheaper than 12 months ago, which is especially good news at the moment, as some customers are still seeing their renewal price increase year-on-year."

She added that as claims costs continue to increase, Confused.com expected to see car insurance prices rise too, regardless of the change in pricing regulations by the Financial Conduct Authority.

Throughout the coronavirus pandemic, car insurance prices had dropped significantly. Earlier in the year average prices were, at one point, as much as £97 cheaper year-on-year.

The average cost of car insurance in the UK is now just £36, or six per cent, less than prices 12 months ago, suggesting prices may be returning to the pre-pandemic levels. For the West Midlands it is £43, also six per cent.

The significant drop in the number of cars on the road throughout the coronavirus pandemic, and a subsequent fall in the number of claims being made led to a sharp drop in premiums with prices reaching a six-year low just last quarter.

Younger drivers are still bearing the brunt of expensive car insurance costs, with those aged 18 forking out £1,407, on average. However, an increase over the quarter means that 20-year-olds can now expect to pay more than 17-year-olds, paying out £1,268, on average. This is arguably down to fewer fresh, 17-year-old drivers taking to the roads over the past year, as the pandemic put a halt to driving lessons. Those 17-year-olds who have recently taken their test and are buying their first car insurance policy can now expect to pay £1,206 on average, which is the lowest price on record for drivers of this age.