The cost of car insurance falls for the first time in three years after crackdown on whiplash claims

A new study has found that the average cost of car insurance has fallen for the first time since 2014, although premiums remain higher than they were two years ago.

cars on roadNew research covering the first quarter of 2018 has found welcome news for UK motorists – the average cost of car insurance has fallen for the first time in three years.

Comparison website Confused.com found that car insurance premiums now cost an average of £768 per year, which is £13 less than what they cost during the same period last year.

The unexpected decrease in price has been put down to insurers lowering their prices following the Government’s recent change to the way compensation payouts for whiplash sufferers is calculated – effectively reducing the amount and cost of whiplash claims that insurance companies had to pay out.

Last month the Minister of Justice unveiled a new civil liability bill and said it would set a fixed compensation payout amount for whiplash claims and require independent medical evidence for all claims before they are settled. The bill also puts into place the planned reversals of last year’s change to the Ogden rate (which is used to calculate how much compensation should be awarded) – after insurance companies argued that victims were being overcompensated for their injuries.

Judging by this new study it looks as though insurers are already beginning to lower their prices in response to the new bill, which is not expected to be passed into legislation until next year.

Car insurance costs remain high despite recent drop

Although car insurance prices may have dropped recently, the average cost of insuring a car is still relatively high compared with previous years. The current average cost of £768 per year is £97 more than it was two years ago, and £261 higher than the premium prices 10 years ago.

Breaking down the data, men still pay more for insurance than women drivers (£95 more per year) – although that difference has fallen from £114 last year. This is despite EU gender rules preventing insurance companies from assessing drivers based on their gender. The reason men still pay more than women is that there are other risk factors at play, with men typically driving more expensive cars with larger engines as well as generally having more motoring convictions and driving more each year.

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Young drivers see the biggest fall in prices

Perhaps surprisingly, young drivers are the biggest beneficiaries of the fall in prices as they now pay £118 less than they did last year. They still have to pay the most expensive premiums though, with the average young driver car insurance policy costing £2,003 per year.

At the other end of the scale, the lowest premiums are paid by female drivers aged between 61 and 65 – who pay just £363 per year to insure their cars.

Men pay the most, with the highest average premium paid by male drivers aged between 17 – 20 years old who pay £2,348 per year. Young female drivers aged 17 – 20 pay £1,699.

It always pays to switch insurers

As part of the study Confused also carried out a survey of 2,000 motorists and found that when it came to paying less for car insurance, loyalty doesn’t pay. Their survey found that drivers who stayed with the same insurer and renewed their policy in the first quarter of 2018 paid an average of £45 more.

Confused.com chief executive Louise O’Shea said:

“Our car insurance price index finally delivers some good news for drivers with the end of rising costs in sight. However, it’s clear that many motorists are not seeing these savings reflected in their renewal letters.”

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