Martin Lewis issues warning to act now to save money as car insurance rockets by 61% | Personal Finance | Finance

Britons are being urged to check if they’re overpaying their car insurance as data shows prices have rocketed by a staggering 61 percent since last year.

In Martin Lewis’ Money Saving Expert (MSE) newsletter this week, the financial journalist warned: “In September, I warned here that we were seeing horrific rises in car insurance. New data out then showed average renewal prices 41 percent higher, and we cautioned you to act urgently as worse was predicted.

“Now… it seems ‘worse’ is here, seemingly even more quickly than expected. So I make no bones about repeating the warning, but this time EVEN LOUDER!” (sic)

According to Mr Lewis, the new statistics from analysts at Consumer Intelligence, who assess 17 million quotes a year, show premiums are up by 61 percent on last year, while comparison site Confused said the average price has now hit £924 a year, £338 more than this time in 2022.

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He then went on to say that “both” are reflected by the “wrath” people report their renewals to him with on social media.

Mr Lewis added: “Sadly, Consumer Intelligence says things are likely (no guarantee though) to keep getting worse until the middle of 2024.”

Insurers have been attributing these increases to factors such as general inflation, the escalating costs of car repairs (as garages charge higher rates for both parts and labour), and a greater number of payouts for written-off cars.

Regardless, Mr Lewis wrote: “The rises are happening. The most pressing issue is how to try to counter them.

“Everyone, take a few minutes to check if you’re overpaying. If you are, even if you’re not near renewal, you may be able to lock in a price to forestall future increases for a year.”

To check for the best car insurance deals, Mr Lewis suggested people use a tool, such as the Money Saving Expert Compare+, which shows the cheapest deal, the cheapest time to buy as well as how people may be able to get the deal even lower by adding other drivers.

Multicar cover is another way people may be able to reduce their policies, which involves having one policy across all the cars instead of separate policies for each.

People may even be able to make a saving by combining home and car insurance, however, Mr Lewis noted this again is “trial and error” and people will have to do this check manually.

While prices are increasing across the board, some areas are being hit harder than others. According to a study by car finance experts CarMoney, which analysed 123 postcode areas using the same driver profile, Liverpool topped the list of highest average premiums at £1,158.72 per year.

Luton follows as the second most expensive postcode, just 82p cheaper than Liverpool with a premium of £1,157.90 and tied on an increased risk likelihood of having to make a claim with 1.54 times the average.

In third is East London, costing its drivers £1,147.90 annually – just £10 less than those in Luton – and then Sheffield (£1,058.47) and Derby (£1,044.83). Of the ten highest-risk postcodes, seven are in the South or Midlands.

Getting the best deal are drivers in Inverness, Scotland. Paying just £386.66 per year, motorists in the UK’s most northerly city are saving £365.60 on average each year – that’s a 51 percent drop.

Cambridge, Carlisle and Chester are the only areas of England to appear in the top ten areas paying the lowest premiums, paying between £421.45 to £522.97. Llandrindod Wells (£455.17) made up Wales’ only appearance at this end of the results.

How to reduce car insurance

Experts at Car Money suggested people don’t always accept the renewal quote. They said: “Often insurers will quote a renewal premium that’s more expensive than your current, even if the terms remain the same and no claims have been made. You mightn’t find a cheaper deal elsewhere, but you could find one with a smaller increase. Be sure to shop around.”

Different job titles, even in the same field, can alter insurance quotes, according to Car Money. The experts said: “Try a few alternate occupations to see if these bring the costs down. Just ensure any titles you try are still an accurate fit for what you do.”

Adding experienced drivers, as well as paying annually, can also help bring costs down. Car Money said: “Adding additional, experienced drivers can help lower the costs, as insurers expect more seasoned motorists to have a lower risk of making a claim. Just make sure any additional drivers would reasonably be expected to drive your car and that they don’t have any unspent motoring convictions – as this may make them a greater risk in the eyes of insurers.

“Although it could cost a lot more initially, paying your premium annually will save on the interest that’s added to monthly instalments. There’s also the added bonus of not having to worry about car insurance costs for another 12 months. According to the average UK premium we calculated, that’s upwards of £60 (plus interest) back in your pocket each month.”

Martin Lewis is the Founder and Chair of MoneySavingExpert.com. To join the 13 million people who get his free Money Tips weekly email, go to www.moneysavingexpert.com/latesttip.