You’d expect the price of any insurance policy to increase over time due to inflationary demands. Perhaps worryingly a 10% increase has been noted in the car insurance sector over the course of the last year and this trend seems set to continue.
According to a report actioned by Deloitte, the findings of which were released earlier in the week, the average third party policy has risen from £473 in August last year to £519 this August. If we take a look at the average cost of comprehensive cover this has shown a rise of 4% in the last year now standing at £458.
Many believed the prices would start to drop with the introduction of financial comparison sites which in their simplest form compare a range of financial products and then return a list of quotes for the customer.
It was thought that the competitiveness these aggregator sites would bring about would cause the insurance companies to review their prices in an attempt to remain the cheapest.
The question is; why have we suffered a period of sustained increase on our car insurance policies and is this trend really set to continue?
The underlying cause it would seem is the current economical instability of the entire financial market and the cause and effect of Bank of England base rate increases. This was no doubt made worse by the huge influx of home insurance claims the insurers faced during the terrible flooding experienced in summer.
With the total claims figure said to stand between £2-3 billion you can see why an increase on the average price of a policy might be necessary if the insurance companies are to maintain their profit margins.
Of course there are some things you can do to reduce the cost of your motor insurance premium, these include; shopping around, altering the voluntary excess of the policy, removing unwanted options, installing an alarm system if you do not already have one and above all driving safely to avoid speeding points and accidents which can cost you dearly when it comes to renewal time.
Don’t be alarmed by the increase in car insurance policies over the last year.
A good deal can still be found by making use of comparison sites and generally shopping around to find a competitive motor insurance policy.
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