The survey of 1,000 UK adults sought to explore the impact of the latest record-breaking increases in car insurance prices across the UK, which have gone up a staggering 67% over the last 12 months according to the latest Consumer Intelligence data.
These ongoing price hikes mean that over a third (35%) of drivers surveyed will choose to pay for their car insurance in monthly instalments when their premiums are up for renewal, to make their payments more manageable. This option is offered by most insurance providers but can add as much as 10% in interest to the overall cost of the policy, making it the more expensive option in real terms.
Drivers aged 35-44 are most likely to opt to pay for their car insurance on a monthly basis, with over half (51%) saying they’ll choose this payment option when the time comes to renew their policy.
Unsurprisingly, young drivers between 18 and 24 are also likely to choose to pay for car insurance in monthly instalments when it comes to their next renewal, with over 40% suggesting they will use this option to spread the cost and make the payments more manageable.
When asked about the recent price rises, just two in 10 (20%) of those surveyed said they would be able to comfortably afford any future increases in the cost of their car insurance policy. Nearly two-thirds (60%) stated they would likely struggle to afford their premiums if car insurance costs continued to rise.
The data also revealed that one in 10 UK drivers would consider getting rid of their vehicle altogether after seeing their car insurance premiums become far too expensive to afford.
Commenting on the issue, Liz Hunter, Commercial Director at Money Expert said, “Previously, young drivers have had to endure high costs of car insurance, due to their increased risk and lack of experience on the road. However, the data from our survey has highlighted that drivers of all ages are being stung on costs when it comes to renewing their annual policy.
The recent surge in car insurance costs can be attributed to several factors, including inflation, vehicle theft and a rise in insurance fraud. It won’t come as a shock to see that motorists are considering all options to afford their annual car insurance policy in order to keep them on the road.
As prices continue to rise, they start to become unaffordable for many to pay off in one lump sum, effectively forcing policyholders to pay for their car insurance in monthly instalments.
Whilst this may seem like a more manageable way to cover the cost for their premiums, motorists will pay more for their car insurance over the course of the year. Opting for monthly instalments can add as much as 10% onto the overall cost of a driver's annual cover, due to the added interest that many insurance providers include.
Further rises in car insurance risks pricing some drivers off the road completely, which could have an impact on employment opportunities, access to essential services and mobility in areas not served regularly by public transport.”
Liz Hunter gives her expert advice for drivers who are struggling with increased car insurance costs:
“There are a number of options that could help drivers reduce the costs of their car insurance:
If paying monthly, use a 0% credit card – Due to interest and service fees, you’ll often pay more by opting into monthly instalments via your insurer. If you’re unable to pay upfront, a better option may be to sign up for a 0% credit card and make smaller monthly payments until it’s paid off. Just be sure to clear your balance in full before the 0% period ends.
Renew in good time – Insurers will ask for a start date for your insurance when you’re conducting your search. If you need cover urgently within the next few days, you may be quoted a higher premium than if you had looked earlier. If you can, try to search and buy your insurance policy two to three weeks before you need it.
Shop around & compare policies – Rather than instantly accepting your renewal price, always use a price comparison site to compare rates from multiple providers to find the best deal. Not only will it save you time but it can help save up to £504 according to our latest calculation.
Add a named driver – A named driver is an additional person that you add to your car insurance policy, that will then have permission to drive the insured vehicle. Adding a more experienced driver to your policy (such as a parent) can reduce the cost of your premium significantly, as it may reduce the overall risk in the eyes of your insurer.
Check for unnecessary extras – Insurers are understandably keen for you to buy as many add-ons to their policies as possible. These might include key cover, legal cover and windscreen cover. The question to ask yourself is, do you actually need these additional levels of cover? Consider opting out of any you don’t realistically need.
Let insurers know if you work from home – If you work from home and never travel to a place of work, let your insurer know that you don’t use your car for commuting. This could significantly reduce your premium due to your car being off the road during peak times.
Maintain a clean driving record – Safer driving habits can lead to lower premiums long-term. The more points you have, the higher your premiums will be. In addition, a no claims bonus is accrued and added for each year where you don’t make a claim on your car insurance. This proves to insurers that you’re less likely to make a claim and can help to reduce your premiums drastically.
Choice of car - Something to remember is that the type, size and age of the car will have a bearing on the cost of your policy. As a general rule, cars with smaller engines and more security features will cost less to insure. So it’s worth checking the potential cost of insurance before purchasing a new or second-hand car to try and save money.
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