The price of car insurance has fallen to its lowest level in more than four years, with the average policy costing around £460 earlier this month. The coronavirus crisis is one of the main factors driving this change which will undoubtedly benefit consumers who are looking to renew.
Compared to the first quarter of 2020, costs have fallen by around £14. The Association of British Insurers (ABI) looked at data which showed the price motorists actually pay rather than the quoted figures. According to the firm, lockdown restrictions are responsible for fewer car journeys over the previous four months.
What this means for insurers is that the perceived total risk has plummeted, this also resulted in cheaper private hire insurance for taxi drivers too.
ABI General Insurance Policy Adviser, Laurenz Gerger, stated that research clearly showed drivers were "benefiting” from reduced road accidents during the lockdown. He said that motorists were given “extra support” by insurance firms. Despite these cost reductions, Mr Gerger highlighted that drivers should still compare policies in order to obtain the best deal for their personal circumstances.
Mr Gerger said: “Our latest motor premium tracker clearly shows that motorists have been benefiting from reduced road accident frequency during lockdown. In addition to the average premium falling to the lowest level in years, motor insurers have provided extra support to their customers by waiving any requirements to extend cover for millions of workers who may need to drive to different locations.
“However, continued cost pressures, including rising repair bills and the delay in introducing personal injury reforms, mean that motorists will need to continue to shop around to get the best deal for their needs.”
Meanwhile, earlier in July it was revealed that insurance firms had saved around £1.3billion since the UK lockdown started as the number of claims dropped sharply. These savings were worth an extra £47 per motorist, meaning insurance firms benefited greatly. Due to the coronavirus crisis, many providers started offering refunds and payment holidays. Admiral offered its customers a £25 refund, whereas LV only offered a refund to those in financial hardship.
However, many customers that did not renew their policy during the lockdown period continued to pay for cover at the same rate as before, even if their vehicle had less use. This means that a large number of motorists are likely paying for more cover than necessary, especially when considering that so many employees have been encouraged to work from home.
Nevertheless, a sizeable amount of car insurance customers will be questioning why they were being expected to continue paying the higher amount during the past few months. This being said, competition is predicted to intensify between firms in the months ahead, resulting in potentially lower costs.