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How to save on your car insurance as prices rise for motorists in UK’s cost of living crisis

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The average annual price paid for car insurance rose by £5 in the second quarter of this year, new data shows.

Drivers now pay an average of £419 and insurers are finding it increasingly difficult to absorb mounting cost pressure, according to the Association of British Insurers (ABI).

The average premium paid for a new policy in the second quarter was £129 higher than for a renewed policy.

Average premiums for new policies were £500 and average premiums for renewed policies increased to £371.

However, the latest figure is still £11 lower than the same quarter in 2021.

An overhaul of insurance rates took place in early 2022, which means that insurers’ renewal quotes for consumers of home and auto insurance should not be more expensive than they would be for new customers.

As auto insurers implemented changes to the Financial Conduct Authority’s (FCA) underwriting rules, they continued to grapple with rising costs and supply chain issues, including continued global shortages semiconductors, higher used car prices and more expensive repairs, the ABI said.

The continued global shortage of semiconductors, in particular, has had a major impact and has been compounded by the fallout from the Covid pandemic and the Russian invasion of Ukraine.

An average car can contain up to 3,000 semiconductor chips, and their shortage impacts vehicle repair times.

Delays in obtaining certain spare parts are in some cases increasing vehicle repair times, the ABI added.

Callum Tanner, ABI Director, General Insurance, said: “Insurers understand that these are difficult times for many households faced with the rising cost of living.

“While, like many other sectors, auto insurers themselves face higher cost pressures, which are becoming increasingly difficult to absorb, they will continue to do everything possible to maintain auto insurance at prices as competitive as possible.”

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How to save on car insurance

The experts at Confused.com and Go Compare reveal how you can save money on your car insurance.

Don’t let your policy renew automatically: A survey of 2,000 UK drivers by Confused.com found that 45% of those who received their renewals last quarter saw their price increase by an average of £41.

Instead, those who shopped around after receiving a more expensive renewal price saved £54, on average, after using a price comparison website and switching insurers.

Recent changes from the Financial Conduct Authority do not always mean a cheaper or similar renewal price, as any increase in average UK car insurance costs will be reflected in renewal premiums.

It is likely that prices will continue to rise as motorists spend more time on the road, meaning the likelihood of claims will also increase.

Compare the prices: Using price comparison sites and researching your policy is one of the best ways to save on your car insurance.

As soon as your renewal date approaches, take the time to do some comparison shopping online and see how the price compares to your renewal.

You can even use the prices you find to haggle with your current supplier.

Annual payments: One option for drivers to save money on their insurance is to choose annual payments. While monthly direct debits may be the most convenient option, paying an annual cost upfront could save drivers an additional 10% when taking out a new policy.

Improve security: Simple things like installing alarms, immobilizers and locking wheel nuts could lower your premium, but it’s important to consider whether the money spent on these security measures is cheaper than the money you would save on your car insurance.

Pay attention to add-ons and see if it’s cheaper to buy them as separate products: Auto insurance top-ups can include things like key cover, legal assistance, breakdown cover, courtesy car cover, personal accident cover, windshield cover and the protected no-claims bonus.

Consider if you really need these add-ons in the first place, for example, do you already have breakdown cover in place? If you feel you need them, shop around to see if you can get them separately for less than the cost of a car insurance package.

Pay attention to additional drivers on your policy: Adding an extra driver to your policy can lower your premiums, if they’re experienced, or raise them if they’ve just passed their test.

But it is imperative that you always be honest about the identity of the main driver of the car, as failure to do so is called fronting and is illegal, and it could also invalidate your cover.

Consider a telematics policy: A telematics (black box) policy helps you tailor your insurance costs based on how, when and how long you travel.

There might be certain restrictions on how you use your car with a black box, for example, curfews or mileage caps. But if you prove you’re a safe, sensible driver, you could see your costs go down.

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