A FAST and easy adjustment to your car insurance policy can cut costs by £240 as premiums rise at a record rate.
New research from Confused.com has found that the average price of a policy is now £222 (40%) more expensive than it was a year ago.
The price comparison website says this is the largest annual price increase on record.
The average cost of a premium is now £776, with car insurance the third highest household bill in the UK after energy and council tax.
Premiums have also increased by £119 – 18% – in the past three months alone, the price comparison website shows.
It comes as insurers battle rising costs and claim numbers.
Louise Thomas, motorcycle expert at Confused.com, says car insurance has “quickly become one of the biggest expenses for motorists”.
But as premium prices soar, you can cut costs in many ways.
Research from Compare Markets has found that drivers under the age of 24 can save an average of £240 by adding a more experienced driver to their policy.
Meanwhile, motorists between the ages of 25 and 34 could save up to £250 by making the same change.
Drivers aged 16-24 can reduce their premium from £1,783 to £1,543 with a small change.
Meanwhile, drivers aged 25 to 34 could see their prices rise from £875 to £625.
Why did the price increase so much?
Car insurance is on the rise at a time when inflation remains high and everyday necessities are getting more expensive.
Inflation level of the Consumer Price Index (CPI) fell to 7.9% in June, from 8.7% in the previous month.
But that still means prices are rising at a faster rate than the Bank of England’s (BoE) 2% target.
But why is car insurance particularly increasing? It is mainly related to the costs that have piled up on insurance companies.
First, Confused.com said, research shows that the number of drivers getting back on the road has returned to pre-pandemic levels.
This could mean insurers pay more on claims than they did two years ago, which in turn adds to everyone’s premiums.
But claim costs also increase dramatically for insurers.
The Association of British Insurers (ABI) finds energy inflation is driving up repair costs.
Meanwhile, the cost of paints and materials has increased by nearly 16% and the average price of used cars has increased by 30% in the past three years.
All of these increased costs are being passed on to the driver’s premium.
How else to cut car insurance costs?
The rising cost of car insurance can hit your wallet – but you can save money with some simple tweaks.
First, you should consult when your current policy is about to be renewed.
Most policies auto-renew if you do nothing but are usually more expensive.
“What we do know is that many drivers were able to save some money on renewals,” says Louise.
“And shopping around is key to this.”
You can save cash by making sure that all of your personal details are correct as well.
Louise adds: “Updating mileage or considering additional security can easily bring your price down.”
Installing a black box in your engine could also be worth it – it could cut your insurance costs by £250 a year.
Bonus boxes reward drivers with careful driving habits and are often installed on young drivers’ cars.
But they can also be a great way for older drivers to save on their insurance premiums.
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