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Car Insurance In 'Record Rise'

Aug 18, 2007
Drivers could be spending a record amount of money from their car loan on motor insurance, a new set of figures have indicated.

According to research carried out by Experian, the average quote for comprehensive cover in the direct market reached its highest point in nearly two years over the course of last month. At a cost of 560 pounds in May, the average policy increased by some 7.9 per cent compared to the same period in 2006.

Meanwhile, the intermediary market was also reported to have seen insurance costs reach record figures. Despite the average comprehensive policy rising to 529 pounds - the highest figure noted for 11 months - Experian noted that this was some 0.6 per cent below the corresponding cost noted in May last year. Overall, the average premium in the intermediary sector was said to be 5.5 per cent lower than that in the direct market. As a result, those who chose the former could well have greater ease in making personal loan repayments.

Commenting on the figures, David Murby, Experian's managing director for insurance services, said: "The last 12 months have seen comprehensive motor insurance premiums in the direct market increase and overtake premiums in the intermediary market. Traditionally, premiums in the intermediary market have been higher, but after peaking in February 2006 (reaching 557 pounds), they started falling significantly."

Mr Murby added that the car insurance sector "is going through a period of transition and it is not as clear-cut as it was 15 years ago". Pointing to "technological advances and changing consumer needs", the director also suggested that the introduction of various direct insurers, retailers and aggregator websites has further complicated the industry with competition between providers becoming ever more "aggressive".

Figures released by the information solutions company also indicated that third party, fire and theft motor insurance costs across both sectors have risen "significantly higher" over the last 12 months. This increase was mainly attributed to younger drivers "with low or no voluntary excesses". Since May last year, a third party, fire and theft policy in the intermediary market was reported to have risen by 2.8 per cent to 617 pounds - the highest point recorded for nearly two years.

Earlier this week, research conducted by Confused indicated that by using different ways to describe their occupation, motorists could cut the cost of their car insurance by up to a third - with the extra money they saved put towards paying off motor loans. Debra Williams, managing director of the price comparison website, claimed that as job descriptions can have "a surprising impact on premiums", drivers should always take the time to shop around for the most competitive deal available.

Motorists were also advised against lying to insurance providers when applying for cover or looking to make a claim. The comparison website reported that those who do so may "end up severely out of pocket" and could well be listed on a central fraud database. As a result, such drivers could see future insurance costs "significantly increase" and could find it harder to apply for a loan.
About the Author
Abbi Rouse writes for AllAboutLoans.co.uk, an online loans comparison site, visit us today for information on all loan topics including cheap loans applications and loans sourcing from all leading UK providers. Our Site: http://news.allaboutloans.co.uk/
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