ave you noticed your car insurance premium increased in 2017? Car insurance premiums have increased by seven per cent over the past year – which is an extra бе35 per driver than 2016, and бе116 more than in 2015. And new rules could mean they will go up even further in 2017. б
Why have car insurance premiums increased? March 2017 saw a major change in the Ogden Rate, which is the way personal injury claims are calculated. When someone gets awarded compensation for a personal injury claim, the lump sum they receive is often invested to maximise the amount in time. So the amount the insurer has to pay out has been subject to a discount rate of 2. 5%. However, with interest rates having been low for so long now, the Ministry of Justice has reduced the discount rate to minus 0. 75% – meaning the payout is higher, but at the expense of the insurer. So insurance payouts are expected to become much higher – which in turn, means that the extra anticipated costs are being passed on in the form of increased car insurance premiums for drivers. Another factor is that new cars are increasingly high-tech, and repairing modern electronic features can come at a cost that impacts the insurance premium. The or so has made buying in spare parts more expensive as well. In fact, the ABI said earlier in 2017 that the average annual comprehensive policy cost бе462 in the final quarter of 2016 – an all-time high. Will car insurance prices go up more in 2017? ItБs looking like it. The average cost of car insurance, experts have suggested, with premiums for older drivers (65 and over) going up by бе300 and those for young drivers (22 and under) increasing by up to бе1000 a year. Huw Evans, director-general of the Association of British Insurers (ABI), adding Бclaim costs will soar. Б What affects car insurance premiums? There are a number of factors that insurers take into account when calculating car insurance premiums, and often little tweaks to some of these can help you cut your car insurance costs.
The car itself – sporty, desirable cars tend to be more expensive to insure, though classic cars are cheaper as owners tend to look after them more. Cheap old bangers may however be considered road risks to other drivers. Where you live – if you live in a postcode with a high number of car thefts, it will cost more to insure; ditto those in built-up, urban areas with a high number of accidents. Where itБs parked – is it on the street outside the house? In a drive? In an underground garage? Surprisingly, well-lit street parking can often be cheaper options than quieter private driveways, or communal parking spaces. Who drives it – another БregularБ nominated driverБs name on the policy could affect the price you pay, for better or worse. Adding another regular driver if they are endorsement free and have a БsafeБ profession can help. The total mileage – the more you drive, you more risk you are. Also, if you use your vehicle for commuting, youБre generally a higher risk as youБre driving in heavy traffic more often. Your claims history – Every year you are claim-free adds another year to your no-claims discount bonus. Claims youБve made in the past five years are likely to affect your premium, unless you had a protected no-claims discount that usually only costs a few pounds extra. б Your job title – Statistical oddities can mean than minor changes in what you call your job title can alter car insurance premiums, depending on whether insurers see it as a БriskyБ profession. Security features – Ensuring you have the right alarm systems, immobilisers, tracking devices and steering-wheel locks can help get the price down. Besides playing with your job title, parking on the street and adding another driver, there are other simple ways you can cut down the cost of your car insurance.
Shop around – Car insurance is a competitive market, and you donБt have to accept the cost in your renewal letter – there are Haggling is acceptable too – once you have a quote, call them up and maybe you can bargain it down further with some number-crunching. Protect your NCD – if you have a good no-claims discount, then a few extra pounds can protect it for future years if you were to make a claim now. б Telematics – This is a black box that monitors your driving habits to send to insurers, and can lower the cost especially for younger drivers. A high voluntary excess Pay an annual lump sum rather than monthly payments if you can, as that always works out cheaper. Do remember to always be honest with your answers when applying for car insurance. That way, you are legitimately covered and shouldnБt be denied a claim if something were to go wrong. Get the best deal by switching and saving. No matter how much you study it, insurance is a tough product to figure out. With so many factors affecting car insurance rates, it can even seem a bit random at times (though we can assure you itвs not). One question we hear on occasion is, Why did my rates go up if I havenвt had any claims? So we reached out to our customer service pros to fill us in. The nature of car insurance: an agreement based on unknown risk When you think about most contracts, the businesses involved know what theyвre exchanging for your money. Hire a lawyer, he or she is giving you hours. Lease a vehicle, the dealership is handing over a set of wheels. But when you buy car insurance, the insurer gives you в a promise? Yes, strange as it is, thereвs nothing to hold in your hand or track on a spreadsheet after you sign a policy. Instead, what you get is an agreement: in exchange for your premium, you get to transfer driving risk to the insurer. And if anything ever does happen on the road, they promise to help pay for the incident.
But hereвs the really cool part: the insurance company agrees to this promise without ever knowing what your incident will cost. So, if you cause an accident, or live in a, your insurer will have your back and be there to pay your claim (up to your coverage limits, of course). On the other hand, if you didnвt cause the incident and donвt live in a no-fault state, it would likely be the at-fault personвs insurer that does the paying. If nothing changed, why did my car insurance go up in price? Because insurers never know what theyвll have to pay, or how often, they canвt offer you one flat car insurance rate forever. Theyвre always trying to forecast the average claim. And в for good or bad в your rate can change accordingly. If your insurer studies your neighborhood, for instance, and finds that collision claims are being filed twice as often than the previous year, or for higher settlements, you might see a small spike in your premium even if you, yourself, didnвt file any claims. Same goes if you move from an area with fewer claims to one with more. The good news? Well, insurers serve large groups of people, so when you do have a rate increase, itвs usually small (hooray for safety in numbers! ). Whatвs more, claim trends in your area can also go the other way. If your insurer discovers an improved claims history in your area, they could give you a rate reduction at your next renewal as a result. Shop around to lower your auto insurance rates Since the cost of car insurance isnвt fixed, most policy terms only run for 6 months. This can be great for customers because it gives you frequent opportunities to reexamine your policy. Before you renew, shop around for the best rate and coverage. At Esurance, we want you to have the right protection for your needs. Try our for helpВ coverage for you based on your input.