Car Insurance - Why is it so expensive?

[Rookie1986]

Hey Guys,

Today I got a letter from my Car Insurance Provider to inform me that my insurance will expire at the end of the month. In the letter they offered me a quote to stay with them for another year. Last year I paid just under £500, I've been driving for 4 years and have 4 years no claims, I'll be 26 years old next week and my new quote comes in at a whopping £800.... Why is my insurance going up while my driving experience, no claims and age should be helping it come down? I don't own a flash car nor do I have loads of modifications (Locking Wheel Nuts & Rear Parking Sensors) but £800 isn't far shy of what I paid back when I first passed my test and got insured.

Anyone got any ideas about what I should do? I'm seriously thinking about just selling my car and cycling to work but then when I decide to drive again I won't have any no claims bonus so the whole thing will just start again....

Rookie

[MadduckUK]

What did a comparison site give you as the cheapest price?

[dangel]

Because crashing cars is expensive, and because a lot of people just pay their renewal without checking.

[jimbouk]

Give them a ring and shop around. Prices have gone up, but companies also make money from people being lazy as dangel says.

[Guy]

Prices are up across the board, plus it's a renewal quote so it will be more expensive, as they're hoping you just auto renew. Shop around.

[DeludedGuy]

Personal injury claims, that's why.

I had a minor accident last week Friday, I was filtering on my motorbike on the right hand side of a static queue of traffic, some numpty decided to pull out of the queue without looking in his mirror, I smash into his side window. Luckily for me I try to anticipate this sort of thing so I was filtering at a modest 15mph which gave me enough time to reduce my speed down to about 4mph at the moment of impact.

I managed to stay upright on my motorbike and had a friend to check it over and no damage was done, however my elbow smashed through his side window.

I informed my insurer who was clearly trying to push me to make a claim against the driver for personal injury, even though I told them I was fine. My insurer decided to call me a further 3 times to make sure I was OK and suggested I see a private doctor just to make sure, I cant help but think that insurance companies push their clients into make false claims, which in turn gives them an excuse to raise their charges.

I hate insurance companies, I wish they could devise a simpler way of doing things because if you get hit by an uninsured driver or are involved in a hit and run you are still screwed.

[Butuz]

It's so expensive because it's mandated by law that we have to have it, and thus is the easiest monopoly of all. People blame personal injury claims but I am willing to wager that the majority of personal injury claim companies have been spawned from/by/with insurance companies. It's one big monopolised circle that's ripping us off.

Butuz

[HalloweenJack]

17 years no claims , full and clean licence - and this year my insurance was more than last year even with shopping about......

[OilSheikh]

Quidco ?

Pass Plus ?

[Saracen]

Personal injury claims, that's why.

....

That, in large part.

And, I agree, check around. It's not always cheaper to move, but inertia is certainly a factor, meaning companies are prepared to offer deals that might not be loss-leaders, but certainly tend in that direction, in order to attract new customers in the hope of then keeping them.

But to be honest, I feel the inertia factor is less important than it used to be, in large part because of customer awareness and comparison sites. It's so easy to switch, and so easy to get better quotes.

But, and it's a very large "but .... be careful, when switching, or comparing quotes, whether with a comparison site or not, to compare the cover. The obvious bits, like premium and voluntary/compulsory excesses, are easy, but if you find a quote a lot cheaper, check the detail of the cover to make sure than if anything is omitted, it;s not something important to you. And that takes time, takes reading the fine print and is a right royal pain in the butt to do.

But if you don't, you could find yourself without some aspect of cover you took for granted, and assumed you had just because you always have had it. While I'm cynical about insurance companies in general, I'm even more cynical about those that compete primarily on price, because I wonder how they do it? After all, they can only gain just so much from efficiency and cost-cutting and sooner or later, are going to start snipping away at the bits of cover that most people, either via laziness or simply not understanding the detail of the exclusions. And, after all, who bothers to read all that guff? So, if you want to be sure you're covered for driving other people's cars, at least as far as legally mandatory "third party" cover goes. CHECK.

Back to prices. Why do they go up? Personal injury claims, inflation, car design meaning repairs are more expensive, perhaps even that overall statistics on your car show an increase in accidents, or that accidents or even thefts in your area, have risen.

Remember, insurance quotes are based on a hugely complex mix of factors with actuaries spending vast amounts of time and effort tracking and analysing all sorts of data.

It can even be as simple as how you answer some questions on a quote form, such as how you describe your occupation. I'm not suggesting being deceitful about anything. That's a seriously bad idea, with the penalties ranging from lack of insurance to prosecutions for fraud. So be honest, but some people can describe themselves in various ways .... including me .... quite legitimately. So it's worth finding out which way has what effect.

Prices overall have been rising. My last renewal, ironically, went down. But working out quite why one person's quote goes up is next to impossible.

Some years ago, my quote (for an M3) went from £600 to over £2000, despite no accidents, no points on licence, etc. I switched from one company to another and it went back down to a little under £600, despite both companies being premium-brand, household name companies., One (the first one) had just decided (i was later told by an inside contact) that they didn't want to cover high performance vehicles any more, so they deliberately priced themselves out of that market. Another company, a few years later, simply refused to quote for renewal on the M3, despite the fact that they were currently insuring it, and again, no accidents, points, etc.

Insurance companies are, in other words, a mystery, as to how they operate on an individual policyholder level.

[Saracen]

It's so expensive because it's mandated by law that we have to have it, and thus is the easiest monopoly of all. People blame personal injury claims but I am willing to wager that the majority of personal injury claim companies have been spawned from/by/with insurance companies. It's one big monopolised circle that's ripping us off.

Unless there is a considerable degree of collusion and price-fixing, it's not a monopoly just because you have to have it. You have to have food too, or starve, and yet there's considerable competition.

In fact, arguably, food supply is closer to a monopoly than insurance, though I'd say it's an oligopoly not a monopoly.

If all insurance companies are facing major factors that affect price in common, and they are, then their response to those factors (like personal injury claims, or the cost of repairs) is simply feeding into their own business models, and having a similar result.

If there are a 100 companies, all of whom have to face a similar and large direct cost increase, it's going to affect them all in the same way. Take, as a perhaps poor analogy, petrol prices. When the cost of the raw material shoots up on the world market, the cost of the raw material for all petrol companies shoots up, and will result in a broadly similar impact on pump prices. Yet, the reason is not monopoly. It is, in fact, the exact opposite .... in a highly competitive market (like oil) you have to pay the market rate because if you don't, someone else will.

Monopoly is all about a single company having the ability to dominate market forces by virtue of the size of their portion of the market. If they act, others have to respond. If one insurance company unilaterally decides to raise it's prices, the others are going to love it, because they'll pick up loads of extra business.

For an example of the point I'm making, consider utility companies, and compare gas/electric, with water. If the gas or electric company get too uncompetitive, even the laziest of us will switch. But with water, you get it from the company you get it from, and have no choice. Which, of course, is why there's a considerable degree of regulation to ensure that there isn't too much, or too overt a level of abuse.

[mmh]

I just had my renewal through last month, and am around the same age... 6 years NCD, driving for 5 years (accelerated NCD) and my renewal was almost exactly the same cost as the year before. even though no tickets or accidents.... I think its just going up across the board... however, my renewal was actually £200~ cheaper than anything on any comparison site or online quote form I tried. muchio impressed with Admiral - that's happened 2 years on the trot! £455~ on a 2.5l BMW 3 series @ 25 years old!

Also things they take into account are the area, and crime in the area,s o if thats gone up, expect your insurance to go up too, I think accidents in the area also contribute, but mostly as said previously its down to people claiming for personal injury