Rising inflation and the cost of living have pushed prices up across the UK. And that includes the amount we pay for motor insurance.
Let’s take a quick look at what’s causing insurance prices to rise.
Why has my insurance price gone up?
Like all the big insurers, we’ve recently had to increase our prices to help cover the rising costs happening across our industry.
While we always try our hardest to absorb extra costs, eventually some of the increases get passed along to our customers. It’s what allows us to keep offering you the flexible, reliable insurance you need to do your work.
But, why are prices going up in general across the insurance industry?
Here’s a quick summary of what you need to know:
- High inflation rates have increased the cost of living, which has affected the prices of most goods and services.
- Modern cars are becoming more expensive to repair and replace, causing costs to go up for insurers, too.
- The motor industry is still suffering from shortages following the pandemic, which is driving prices even higher.
- While insurers try to absorb as many of these costs as they can, eventually the increases get passed along to customers.
- If there have been changes since your last quote — say you’ve moved house or bought a new car — your renewal cost is likely to change, too.
Keep reading to learn more…
The rising cost of cars
The technology inside our cars has advanced at a fast rate. From light-detecting headlamps to keyless ignition, all of these modern additions make our cars better, smarter and more efficient. But they also come at a cost.
As the value of cars and their parts has increased, so has the cost of repairing or replacing them. And this cost gets passed along to your insurer following an insurance claim.
The growth of keyless entry cars has also seen a rise in the number of thefts, which only adds to the insurance risks and associated costs. So, while new technology is great on the road, it is affecting the price of your insurance.
During the pandemic, businesses and the transport industry were hit hard. This included the factories that make semiconductor chips, and the supply chains that move them.
These chips are used to make lots of different products, including cars. And they’re expensive — the chips and the technology that surrounds them can make up roughly a third of the cost of an average car.
The semiconductor shortage has led to delays in the delivery of new private and commercial vehicles, with a backlog of orders reaching back to 2021.
This shortage of new vehicles has driven up the market value of second hand cars, including hire cars and replacement vehicles used by insurers.
If you’re involved in a collision and your car needs to be repaired or replaced, your insurer will cover the cost. As these costs have increased, so will the cost of your insurance policy.
Your risk factors as a driver
Beyond the global economy, there are reasons closer to home that might cause the price of your insurance to change:
Your driving history
If you’ve been involved in a road traffic accident since your last quote, you might see your renewal price go up.
Even if it wasn’t your fault, your insurer will need to consider any previous claims when calculating your risk as a driver.
The same goes for points on your licence. The more you have, the more likely that your insurance cost will rise.
If your car or van is worth a lot of money, you may end up paying a bit more for your insurance. That’s because it would cost your insurer more to repair or replace it if it got damaged.
Expensive vehicles are also more likely to get stolen, as thieves tend to target cars that are worth more. This increased insurance risk can add to your renewal quote.
The same goes for powerful vehicles. If your car has a large engine capacity, or has been modified to make it go faster, your insurer might think you’re more likely to be involved in a collision.
Where you live
Insurers use your postcode and where your vehicle is parked at night to help calculate your risk profile.
If there’s a high crime rate in your area, or your vehicle is parked on a busy street (as opposed to a locked garage), you may end up paying more for your insurance.
So if you move address before your renewal quote is due, always check to see how it will affect the price you pay
A message for our loyal customers
As an insurer, raising our prices was a tough decision to make.
We know that, as a self-employed driver or small business owner, your insurance can make up a large part of your overall running costs. That’s why we work hard to keep our prices as fair as we can.
By raising our prices now (for the first time in over 4 years), we’re able to keep providing the insurance you need and the level of service you’ve come to expect.
Thanks for your patience and understanding as we work through these changes together — we really appreciate it.