Car insurance premiums fall in largest drop since 2018

The average premium for a comprehensive policy is now £770

There is good news for motorists as comprehensive car insurance premiums fell by 5% in the second quarter of 2020, the largest drop since early 2018.

The average cost of car insurance is now £770, following a £19 (2%) decrease over the past year according to Confused.com.

Why have premiums fallen?

The past three months have seen a huge change in circumstances for many people, with millions spending more time at home. Half of UK motorists have cut their annual mileage as they have been using their car less during lockdown, meaning there is less traffic on UK roads.

This reduces the risk of accidents, and therefore minimises claim pay-outs for insurers.

More to the story

While the fall in accidents and claims has put temporary downward pressure on the cost of premiums, research by Confused.com and Willis Towers Watson revealed other factors have affected prices.

The research found that fewer young driver quotes were conducted because fewer newly-qualified young drivers were coming onto the roads. It also discovered that customers were now seeking quotes at lower annual mileage levels.

Graham Wright, UK lead of P&C and personal lines pricing at Willis Towers Watson, says the coronavirus pandemic means pricing could become harder for insurers.

He says: “Looking further ahead, as we emerge from lockdown and roads become busier, insurers are attempting to predict claims and adjust prices before the full impact of covid-19 on both medium and long-term frequency and severity trends is known.”

Regional prices

In most cases, insurance premiums across the UK have fallen, with East Midlands and the Scottish Borders being the only exceptions. In these regions, motorists are now paying £4 (1%) and £2 (0.5%) more than last year, respectively.

The average cost of car insurance in the East Midlands is now £753, while motorists in the Scottish Borders can now expect to pay £584 on average.

Inner London is now the only region in the UK where motorists pay more than £1,000 for their car insurance, despite a £70 (6%) drop in prices in the past three months. Drivers in the region pay an eye-watering £1,202 to insure their car, on average.

Motorists in Manchester and Merseyside and Outer London are no longer paying more than £1,000 for their car insurance but are still having to fork out a whopping £984 and £971, respectively.

How to get cheaper car insurance

Whether you are looking for a new car insurance policy or hoping to renew, these tips can help you find the most competitive car cover.

Annual payments

If you pay your annual premium in a lump sum this will make your car insurance cheaper, as paying by instalments normally means being charged extra interest.

It is also wise to renew your policy as early as possible to get the best deal. By renewing your policy 20 to 26 days before it ends you can save up to 40%.

Shop around

Shopping around for car insurance can help you get the best quote.

However, always be careful and make sure you are comparing like-for-like cover. This is because even though a policy might be cheap it may not have the same level of cover as more expensive ones.

By using a price comparison website you can compare hundreds of different offers quickly and easily.

If you are unhappy with the price being offered by your existing insurer tell them the quote being offered by a competitor. Doing this will often persuade them to lower the price.

Increase the excess

Another way of bringing premiums down is by increasing the voluntary excess.

This is the fixed amount you have to pay if you make a claim. So if your excess is £200 and your claim is worth £500, the insurance company will pay £300. If the accident is the fault of the other driver the excess might be waived.

However, usually you will have to pay it so make sure you choose an amount you are comfortable with.