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The mistake costing UK drivers £2bn

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Written by: Paloma Kubiak
09/10/2018
Car insurance premiums may have stabilised but drivers who auto-renew are still potentially overpaying by £2bn every year, analysis reveals.

Six in ten motorists – approximately 19 million people in the UK – do not shop around for their car insurance, choosing to stick with their previous provider.

But by switching, drivers could save an average of £113 on their insurance cover. For younger drivers, the savings can be more – an average of £326 a year. The table below shows the average saving for each age group.

According to Comparethemarket’s Premium Drivers Index, the average car insurance premium has plateaued after consecutive rises in the last few years. It currently stands at an average £731.

However, the comparison site said insurance premiums are still well above levels seen five years ago, when the average premium stood at £526 – an increase of 39%.

Simon McCulloch, director at Comparethemarket, said the past five years have been difficult for British motorists of all ages who have faced relentless insurance price rises resulting in extremely high premiums across the board.

“The hikes were primarily driven by government changes to IPT [insurance premium tax] and the Ogden discount rate – the impact of which were passed directly onto the consumer. Now with prices holding steady at near record levels, it is essential the government takes no further action to punish British motorists whose financial health will inevitably have been impacted by these changes.

“Motorists however, should not content themselves with stabilising prices – many have the ability to save hundreds of pounds a year. The fact that £2bn may be being wasted through inertia demonstrates how motorists need to take their fate into their own hands. If shopping around became the norm for the majority of drivers, the increased competition would help drive prices down rather than simply hovering at historically high levels.”

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