Philipa Davies says she “couldn’t believe it” when she saw the car insurance quotes her son Max received, after saving up to buy his first car.
The 18-year-old’s Ford Fiesta was registered in 2008 and is worth about £1,700. However, after using price comparison sites to find the best insurance deal, Max found the quotes for the most basic level of cover ranged from over £5,000 to £6,000 a year.
The best available figure of about £5,500 – which included a voluntary excess of £650 – would have equated to 28 per cent of Max’s £20,000-a-year salary before tax. Fuller cover would have cost even more.
Philipa, who runs an engineering business where Max works, said that her own cover was not much cheaper, when she came to renew late last year.
She has a five-year-old Hyundai, which had previously cost £900 per year to cover, but her renewal quote was £2,000 – over double last year’s cost.
“I’ve never had an accident that was my fault and I’ve been driving since I was 18. I have absolutely no idea what could possibly have caused the cost to double,” said the 55-year-old.
The cost of insuring Max’s car, her own car and a works van for her company would have been over £9,000 for the year, which she describes as “completely daft”.
Philipa eventually spoke to a broker and insured all three vehicles under fleet insurance for £3,600 a year – a saving of more than £5,000 but says this move was only in “desperation” because there were no other options.
“It does my head in that insurance is becoming so expensive. We had to jump through so many hoops to get a decent level of cover, and the fleet insurance option is hardly something that’s available to most people,” she says.
She adds that the high cost of insurance is likely having massive impacts on the economy.
“Max would have sold his car, which would have hugely limited his ability to work. He’d have had to rely on public transport,” she said.
Car insurance costs are certainly on the rise and at a faster rate than inflation. The average cost for car insurance rose by 29 per cent last year, according to the Association for British Insurers (ABI).
Philipa fears younger drivers, who typically face the highest premiums because of the bigger risk of them being involved in accidents, are likely to bear the brunt of this.
“It’s a perfect storm because of all the costs that people – particularly young people – are paying. Mortgage or rent costs, utility costs, they’re all going up and you can’t avoid it.”
She says that the high cost of insurance is “abhorrent” in a captive market because people have to have insurance to drive.
Her family are not the only ones to have faced increases this year.
Molly Hancock, an accountant from Lancashire, says she saw her bill rocket by over 40 per cent last year, from £387 to £555.
The 27-year-old has had no claims in her nine years driving, and owns a decade-old Nissan Juke.
“Driving insurance is an expense you have to pay, there’s no way you can cut it or avoid it,” she says.
She explains the cost would have been higher had she not opted to pay her insurance premium all in one go, with even higher costs if she had opted to pay monthly.
“Paying all in one ate into a real chunk of my savings,” she says.
In the end she used a cashback website, Topcashback, to get £35 back on her bill. This is an amount she says isn’t huge, but “builds up” if you get on other bills. She’s also used the website to get other types of insurance, including travel and home, in the past.
So why have costs been going up? The ABI says it is due to the rising cost of paying claims.
It says the cost of paying claims is up 21 per cent, and that the overall number of claims settled, at 570,000, rose 5 per cent on the same quarter last year.
It says the cost of repairs have been “steadily increasing” and that this is largely due to vehicles being much more sophisticated.
But insurance is a competitive market. Though the costs are rising across the board, if your bill has shot up, it’s likely worth ditching and switching to another provider.
Auto-renewing can be far more expensive than moving to another insurer. It’s an industry where it is worth remembering that loyalty often does not pay.