You haven’t made any claims, so why is your home and car coverage skyrocketing?

Soaring car and home insurance bills are the latest sting for struggling families as the cost of living crisis continues to bite.

Car policies are on average £51 more expensive than last year. It’s even worse for young drivers, who face increases of £100 or more, researchers say.

Meanwhile, home insurance premiums typically increase by 6%, from £178 for one year’s cover to £189. And these are just average increases, with some households reporting that costs have doubled.

insurance policies cost £50 more than last year, on average, and it’s even worse for young drivers, who face increases of £100 or more” class=”blkBorder img-share” style=”max-width:100%” />

Driving costs: Car insurance policies cost £50 more than last year, on average, and it’s even worse for young drivers, who face increases of £100 or more

Experts say the spike in premiums is largely due to inflation pushing up the cost of claims – and more accidents after road traffic spikes post-pandemic.

But as household bills swell, there are fears desperate customers may be tempted to cancel vital cover altogether. This month, the Financial Conduct Authority warned that some people could find themselves without a safety net.

Matthew Upton, director of policy at Citizens Advice, adds: “It is essential that people can access insurance. But we know people have to make tough choices when trying to pay their bills.

Damning data

Research by Compare the Market found that the average motorist buying an annual car insurance policy between April and June this year paid £704, compared to £653 in the same three months of 2021.

Young drivers aged 17 to 24 paid £1,247, up from £1,112 last year.

Julie Daniels, car insurance expert at comparethemarket.com, says: “This premium increase is the result of increased cost pressures for insurers, including an increase in the value of used cars and higher repair costs. .

“As the cost of claims has increased, insurers are now passing those costs on to customers through higher premiums.”

The study also found that cars with large engines attract higher insurance bills, even if the vehicle is worth less.

The average cost of one-year cover for a £2,232 Vauxhall Corsa SXi with a powerful engine was £882 in 2022, up 18% from £748 the previous year. Motorists with a Fiat 500 saloon, worth £5,119, paid £521 for insurance, up 12% from £464 in 2021.

Research by Compare the Market found that the average motorist buying a car <a class=insurance policy between April and June this year paid £704, compared to £653 in the same three months of 2021″ class=”blkBorder img-share” style=”max-width:100%” />

Research by Compare the Market found that the average motorist buying a car insurance policy between April and June this year paid £704, compared to £653 in the same three months of 2021

Loyalty fees

The surge in insurance prices comes despite changes that were supposed to mean cheaper premiums this year for loyal customers.

For years, millions of policyholders have been penalized by incessant premium increases at renewal. Now they can benefit from the same discounts as new customers.

Research firm Mintel found that the price of a policy is the main consideration for almost half of motorists when choosing between multiple insurers. And experts say rising premiums have led some to consider selling their cars.

Aviva customers also faced huge increases in home insurance, even though they didn’t make a claim.

Church pastor Martin Pearson had been with the company for nine years when it tried to raise the premium on its three-bed tractor-trailer by 22% this month. The grandfather was quoted £207, which is £37 more than he paid last year.

Martin, from Stroud, Gloucestershire, who found a quote from another firm for just £145, says: “I don’t see how a 22 per cent increase, when there has been no change or complaint , can be justified.

An Aviva spokesperson said Martin’s quote was “fully compliant with new FCA rules” and lower than the price he would have been offered as a new customer.

Here’s how to bring the prices down

  • Pay your annual bill in one go. Motorists who spread the cost of their premiums over 12 months will be charged £60 more on average, while home policyholders will pay £13 more, according to comparethemarket.com.
  • Do not double cover. The Admiral estimates that almost a million motorists pay for separate breakdown insurance while already being covered by a car insurance policy.
  • Edit your job title, but be specific. Motorists who say they work in software rather than computer games could save £100, according to MoneySavingExpert.
  • Telematics boxes monitor your driving habits and can reduce premiums. Data from MoneySuperMarket suggests the average 17-19 year old saves £145.
  • Increase your voluntary deductible. Choosing to pay more if you make a claim will lower your premium.
  • Overestimating the value of goods can mean you pay an unnecessarily high premium for a contents policy. If you don’t know the value of an item and have lost the receipt, try checking online.
  • Keep shopping. Motorists save an average of £54 by using comparison sites, according to Confused.com. And always negotiate with your current supplier.
  • Drive carefully. Bonus-malus can reduce a premium by up to 60%.

Future fears

Experts fear the economic climate could turn people into criminals if they are tempted to make false claims or drive without insurance.

A Consumer Intelligence poll last month found that one in five people would consider insurance fraud, up from one in ten in 2021.

Uninsured drivers risk a £300 fine and six penalty points on their licence. Those without home insurance could pay hundreds of thousands of dollars in repairs for any damage caused by a storm, fire or flood.

Darren Black, head of general insurance at Nationwide building society, says some are already canceling their coverage.

Skyrocketing bills: Home insurance premiums rise by 6% on average, from £178 for a year's cover to £189

Skyrocketing bills: Home insurance premiums rise by 6% on average, from £178 for a year’s cover to £189

And there may be more hikes to come.

Direct Line blames inflation for driving up the cost of insurance claims, with its shares falling to their lowest level in a decade.

The company warned that although it had raised premiums, it was still lagging behind the cost of payments.

Jenny Ross, which one? money editor, warns: “The FCA should closely monitor how insurers set prices.”

A spokesperson for the Association of British Insurers said the companies were committed to keeping prices “as competitive as possible”, adding: “Like many other industries, insurers face increasing cost pressures , including some building materials, supply chain issues, and more expensive vehicle parts and repairs.

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My car premium DOUBLE in one year

By HENRY ACTS

Of all the tedious personal administration tasks that need to be done each year, renewing your auto insurance must be considered the most tedious.

Almost without fail, your current provider will contact you to tell you that your coverage is increasing, leaving you to search price comparison websites for another deal.

I can’t stand price comparison sites. They always seem to be trying to sell something I’m not even looking for, bombarding me with intrusive emails weeks after visiting their site.

And the questions! They just go on forever. How many kilometers do you travel each year? How many claim-free years do you have? Does your car have an industry approved James Bond tracker/disabler/ejection seat? I don’t know, I don’t care.

In fact, it sucks so much that if the cost of my renewal quote with Sainsbury’s Bank was only a few pounds more than they charged last year, I would have been tempted to accept it.

So imagine my shock when I checked that the listed price had dropped from £417 per year to £1,361.

At first I assumed it was some kind of system error. That he thought maybe I had gone from a lowly 2-litre Mercedes to a McLaren F1. But after calling Sainsbury’s he assured me everything was in order and that was the price.

When I went to see my other options online, I also got a nasty surprise. The cheapest offer available was around £800. Much better than what Sainbury’s offered. But still double what I had recently paid.

None of this makes sense. I am (or at least I should be) a poster child for the insurance industry.

As a Londoner, I hardly drive much and when I do the speedometer needle is barely pressed. In the 27 years I’ve been on the road, I’ve never searched more than a bean in claims.

The only conclusion is that it was part of the giant financial crisis that we have to swallow.

Another blow to household finances. And those plans to own a Ferrari are starting to seem further away than ever.

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