Martin Lewis warns viewers about drastic car insurance changes
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Car insurance rates have hit an 18-month high, as all customers are facing higher costs, even if loyal drivers choose to auto-renew. Motorists in the UK are now paying £550 for their car insurance, on average, following a £12 increase year-on-year.
Loyal customers continue to see their prices increase as two in five drivers who received their renewal last quarter saw their prices increase by £39 on average.
This is a £27 increase on the cost of shopping around, despite major changes from the Financial Conduct Authority (FCA) which was designed to protect drivers.
Under the new regulations, insurers must offer drivers the same price they would receive as a new customer buying in the same way, banning what was previously known as a new customer discount.
Following these changes, almost 20 percent of drivers who received their renewal in the past three months wrongly believed that their renewal wouldn’t increase, with a further one in five expecting their renewal price to be cheaper.
Almost a fifth of drivers who were due to renew last quarter wrongly believed that their renewal price wouldn’t increase.
Louise O’Shea, CEO at Confused.com, reminded drivers that changes won’t guarantee a cheaper renewal price.
She said: “Just like many of our household bills, car insurance costs are starting to increase, and this is mostly down to the fact that we’re driving a lot more now than we were 12 months ago.
“This means the number of claims insurers are paying out on is likely to have increased too.
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“It’s worrying that so many people believed the pricing changes that came into effect in January would guarantee them a cheaper price, and I have no doubt they had quite a shock when they received their renewal notice and it was higher.
“This is purely down to the fact that the cost of insurance is going up, and this stands for renewal prices too.”
Prices have been creeping up for the past six months, with drivers today paying £36 more than those who bought a new policy six months ago, on average.
While Manchester still has the highest car insurance cost outside of London, prices have fallen by two percent in the past 12 months.
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