Whether you own your car or you drive it under a car leasing or contract hire agreement, your insurance is likely to be one of your biggest motoring costs. Over recent years the cost of insuring your car has risen steeply – but new research shows that this is starting to change.
Figures from the AA have revealed that the cost of the average car insurance policy fell faster in 2013 than in any year since records began. We look at why car insurance costs are finally starting to fall and offer one simple way that you can knock pounds off the cost of your policy.
Car insurance costs fall by the biggest amount on record
The Daily Telegraph reports that car insurance premiums fell in 2013 by the largest amount since the AA started tracking them 20 years ago. In 2013 there was a 14.1 per cent drop in the cost of car insurance, meaning that in the last two years more than £100 has been sliced off premiums.
And, the cost of your insurance could be set to fall by a further £15 thanks to a joint initiative between insurers and the DVLA.
The new plan will see drivers providing their driving licence number to insurers. This will allow insurers to automatically establish every driver’s experience, their convictions and the date they passed their test. The Telegraph reports that cutting out errors like this and streamlining the insurance application process will lead to the average £15 reduction.
While falling insurance prices are great news for car leasing, contract hire and car finance consumers, some experts believe that the cost of premiums may be set to level off.
Simon Douglas, director of AA Insurance, said: “I fear that the downward spiral will end with a bump. I expect the fall to continue at a slower rate over the first quarter of this year, but I think premiums will then level off.
“My biggest fear is that the falls are too great, premiums will bounce sharply up again later in the year which would not be good for the reputation of the industry.”
If you want to pay less for your car insurance there is one simple way that you can reduce your bill significantly. Keep reading to find out more.
A simple way you can shave pounds off your car insurance bill
A new report has found that almost a third of British drivers could cut the cost of their car insurance by an average of just under £100.
The data from insurance industry researchers Consumer Intelligence claims that 31 per cent of Britain’s drivers pay for insurance in monthly instalments by direct debit. And, if you have ever obtained a car insurance quote, you may have seen that it is cheaper to pay for your premium annually in a lump sum than it is to spread the cost of your cover over monthly instalments.
The Daily Telegraph reports that insurers charge interest at an average APR of 23 per cent for the privilege of paying monthly. That adds an extra £99 on the annual average insurance premium of £922. The Consumer Intelligence report found that one insurer charges a hefty 31.9 per cent APR for the privilege of paying monthly, while even the lowest APR was 9.9 per cent.
Across the UK, drivers are paying an additional £682 million a year simply by not paying for their car insurance up front. So, one way to slash the cost of your cover is to pay your premium in a lump sum. While paying monthly is a sensible way to budget for car insurance, you’re increasing your expense by doing so.