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Car insurance bills up 14% in past year

Paloma Kubiak
Written By:
Paloma Kubiak
Posted:
Updated:
20/09/2016

The average annual car insurance bill has rocketed 13.5% in the past year taking premiums to nearly £800, even before the next motor tax rise takes hold.

Motorists continue to be hit with higher insurance premiums as the average cost has risen to £788 for an annual policy.

According to research by Consumer Intelligence, a combination of another rise in Insurance Premium Tax (IPT) from 9.5% to 10% from 1 October and increased claims is driving the hike in motor cover.

However, it found huge disparities in the cost for drivers based on their age and location.

Older drivers are seeing higher price rises at 15.3% but their average annual bill as calculated by the five cheapest premiums is just £348.

In comparison, younger drivers are paying the highest bills – average premiums for under-25s are £1,831, although prices are rising slightly slower than average at 9.4%.

But this age group is seeing the benefit of telematics – black box technology which rewards safer driving with lower prices – as around 55% of the most competitive premiums for under-25s come from these policies. Just 8% of the best deals for those aged 25-49 come from telematics.

Turning to regional differences, Consumer Intelligence’s data shows the cheapest place to insure a car is Scotland where average premiums were £562 which is around £40 cheaper than the second lowest; Wales at £605.

Drivers in the north west and London are paying up to 50% more than the national average – the average bill is £1,177 after a 17.3% increase in the north west and £1,068 in London after a 16.7% rise.

Ian Hughes, chief executive of Consumer Intelligence, said: “We are seeing a real acceleration in shopping around and all customers need to ensure they are receiving the best value for money from their insurer which should be easier as providers need to make it clear what last year’s premium was when they send renewals.

“Under-25s who pay the highest average premiums at £1,831 need to seriously look at black box technology as a way of limiting price rises but can take some comfort from the fact that prices are still lower than they have been.”