Unfortunately, the cost of many things we take for granted in our everyday lives has risen over the last few years. This is due, in part, to the economic consequences of the Covid-19 pandemic and other factors contributing to what has become known as the cost-of-living crisis.
The Association of British Insurers (ABI) has put the average increase in car insurance in the UK at 34% from late 2022 to late 2023, with insurance premiums for 17-20-year-olds thought to have gone up by as much as £1,000 within a year.
In some cases, insurance for Electric Vehicles has even doubled, making it less attractive to the budget-conscious driver to own a sustainable low-emission car.
Interestingly, equivalent premium hikes have not been seen in other European countries with premiums rising by 6% in Italy, 5% in Spain and 2% in France over the same 12-month period.
While rising costs have been seen across the board, insurance premium increases typically seem significantly more than the average reported rates of inflation over recent months.
This could be down to several factors, including a rise in vehicle theft and the change in legislation regarding solvency requirements for insurers. This has the potential to influence premiums indirectly if insurers need to be certain that they have sufficient capital reserves to meet the regulatory requirements and absorb potential losses, particularly in the case of catastrophic events that may result in large settlements.
Fraud is also an ongoing concern for insurers, with fraudulent claims for exaggerated injury or staged claims costing them billions of pounds every year.
The use of modern technologies in the automotive industry is having an important effect on the car insurance industry. Technology is increasingly being used to personalise car insurance policies – those who are typically safer drivers may be able to take advantage of lower premiums, while those who drive in a riskier way are deemed more likely to be involved in an accident that could make them more expensive to insure.
Modern anti-theft technology such as immobilisers and GPS trackers can make vehicles harder to steal and easier to recover if they are stolen, potentially resulting in fewer theft-related claims.
Having said that, the cost of repairing or replacing sophisticated technology in a vehicle that is involved in an accident can conversely lead to more expensive cover.
In the current climate however, there are a few ways you could potentially soften the impact on your wallet.
These include paying your premium upfront rather than in instalments or choosing a higher voluntary excess on the assumption that you may not need to make a claim (although, of course, you should still budget to pay the excess if the worst happens).
Sometimes even challenging your renewal quote rather than accepting it straight away can also lower your premiums.
Finally, if your driving time is limited, you may be able to take out car insurance by the day, paying only for the days you drive rather than seeing the cost rack up while your car is sitting unused on the driveway.
Given the rising costs of car insurance, you may prefer to look for other ways to keep your costs down when it comes to running a car. Leasing is a cost-effective way to drive, whether as a private individual or if you run a business that depends on a fleet of vehicles.
Leasys vehicles come with the road fund licence, roadside assistance and a 24/7 driver helpline included allowing you to reduce some of your other driving expenses. Optional, additional maintenance can be paid for by fixed, inflation-proof monthly instalments added into your monthly rental, taking away any concerns about excessive costs becoming unmanageable.
Contact Leasys today to find out more.
