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Revealed: Car insurers raise prices for no reason

Eleanor Newis
Feb 6, 2019

The cost of car insurance in the UK has shot up, but most drivers are still clueless as to why they are paying more for their policies. Today, seemingly inconsequential things can increase your premium — these include your martial status or job title.

Young drivers are now quoted massive prices, much higher than what their cars are worth. Being the innocent party in a carpark prang can then mean you will end of paying even more.

The city regulator, the Financial Conduct Authority (FCA), has found that the five most affordable comprehensive motor insurance policies have increased by 23% in the last three years. This has gone from an average of £494 in 2015 to £610 by the end of last year.

The quotes customers get for automatic renewals of your policies are rarely lower than the premiums customers have already paid.

James Daley, the managing director of consumer group Fairer Finance, believes that the process is becoming ‘more sophisticated and more opaque.’

He continues: ‘We can see what questions we’re being asked, but it’s not clear how these are being used to generate a price — or what other factors they are taking into account.

‘There are no real boundaries around what’s fair — so we’re increasingly seeing insurers take questionable decisions on pricing.’

Examples of how the industry has begun hiking prices include one consumer's experience, where their premium doubled to £1,500 after someone else hit them.

Retired executive Harvey Rose, 84, told This Is Money he was baffled when his insurance doubled to £1,500 after an incident he couldn’t have avoided. A driver crashed into his wife’s vehicle at a roundabout, and their premium shot up up to £1,520 whereas the previous year it had been only £731.42. He had insured both himself and his wife with Admiral.

Harvey said: ‘I was outraged at the thought of a no-fault accident affecting my premium.’

Admiral said: ‘We may have considered Mrs Rose as a lower risk originally. Following the accident in 2016 she was rated as a higher risk, which increased the premium.’

Some insurers also say that married people are less likely to make claims. So, they charge more when people get divorced. For example, the cheapest five policies for a 30-year-old divorced woman living in Cardiff average just over £485 per year.

James Daley says: Who knows why there is a statistical link that divorced people have more accidents. It would be easy to posit some theories — some which might cause offence.

‘The question is, does society feel comfortable with insurers taking our marital status into account when pricing insurance? For me, the answer is a firm no.’

As well as divorced drivers, young motorists are quoted higher and higher premiums. They are seen as more likely to get into accidents, so are charged thousands of pounds for their insurance — often more than their first car is worth.

The average 17-year-old can expect to pay £1,964 per year, but others face higher costs. The top most affordable premiums for a 17-year-old from Cardiff driving a Vauxhall Corsa averaged out to £4,372.

One customer told This is Money she was shocked to find out her premium quote. Hotel worker Hayley Round discovered that it would cost her £4,000 insure her car, which was a used Renault Twingo.

She said: ‘I was working full-time but there is no way I could have afforded that. I had no experience but the cost seemed very unfair.’

Other factors that can influence your premium are your job title and the timing of the quotes you get. Insurers will offer customers cheaper quotes if they think drivers are less risky — if you buy your car insurance before it needs to be renewed you’ll probably be judge less risky.

This is a way you can beat the insurers at their own game and grab yourself a cheaper premium. You should also be very careful what job title you use on your application to the insurer, as using one that is even slightly different can mean that you are fined.

Your job can influence your premium too — sports professionals are usually charged more, as insurers say they are often young and driving expensive cars. A cook will be charged about £731 but a chef could pay around £278 more than this.

The most important thing to remember is that loyalty doesn’t translate into good prices. Make sure you shop around for the best deals every time that you need to get a new policy. This will mean you can find the right deal for you and avoid the price hikes your insurer is planning.

Use a price comparison site like A Spokesman Said to make sure you’re getting the best deal and always look around before your policy comes up for renewal.

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When did you last switch your car insurance provider?

Last year 65% of customers didn't switch their car insurance to try and get a better deal.