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Car insurance premiums continue to rise

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10/01/2018
Drivers continued to be hit by premium increases during the last three months of 2017, with the average fully comprehensive policy rising 4% from £553.28 to £574.11, according to data from MoneySuperMarket.

The data is based on analysis of 1.5 million car insurance quotes on the site. It showed drivers in Lincoln have been hit hardest, seeing a 9.2% increase, from £399.84 to £436.67. In contrast, drivers in Sutton and Preston saw their insurance bills fall 3.96% and 2.61%.

East London remains the most expensive place to insure your car, with premiums sitting at £1090.65, while the Shetland Islands is the cheapest at £310.80.

Women saw the average cost of a fully comprehensive policy decrease 2.62% over the same period last year, while men saw a fall of half a per cent, from £612.70 to £609.66. However, some age groups – notably the youngest and oldest drivers – were hit by chunky rises.

Three key factors affected premiums in 2017 – changes to the discount rate applied to claims pay-outs, the increase in June to insurance premium tax (IPT) and an increase in fraudulent claims. Fraud now adds around £40 to every car insurance policy.

Kevin Pratt, consumer affairs expert at MoneySuperMarket, said: “Last year showed how many factors influence what we pay for our car insurance. The change in February to the way compensation payments are calculated took everyone by surprise, and the hike in IPT in June was another hammer-blow.

“It is likely the discount rate will be set at between 0 and 1 per cent at some point in 2018, which should allow insurers to reduce premiums. We can only hope there are no further increases in IPT, either in the Chancellor’s Spring statement or in the Budget in November. We should also keep an eye on reforms to the small claims process, due in October. Hopefully these will reduce the incidence of fraudulent whiplash claims.”

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