Average Motor Insurance Premiums in the UK Rise Amid Cost of Living Pressures

Are you feeling the squeeze of rising costs in the UK? Well, you’re not alone. According to the Association of British Insurers (ABI), the average policy for new motor insurance customers in the UK jumped in the second quarter of the year, as cost of living pressures continue to tighten their grip on households.

The ABI reported that the average premium paid for a new policy in the period was £129 ($156) higher compared to a renewed policy. This means that new policies now cost an average of £500, while renewed policies increased to £371 over the three months. It’s clear that the rising inflationary pressures are making it increasingly challenging for insurers to keep premiums affordable.

In response to these challenges, the UK government recently banned the controversial practice of “price walking,” where customers were signed up at a discount only to face significant price hikes over time. While it’s still too early to fully assess the impact of this ban, the ABI noted that the difference between new and renewed premiums has increased.

Direct Line, one of the UK’s leading insurers, recently announced a 15% price hike for new customers in the first half of the year. This increase is in response to the effects of soaring prices for everything from used cars to spare parts. Chief executive Penny James explained that motor claims inflation is expected to rise by about 10% in 2022, and rate increases need to reflect this reality.

So, what can you do to save money on a low income in the face of rising insurance costs? It’s important to shop around for the best deals, consider bundling your insurance policies, and explore discounts for safe driving habits. By taking proactive steps to manage your insurance costs, you can navigate these challenging times with greater financial security.

Stay informed, stay proactive, and remember that you’re not alone in facing the cost of living crisis in the UK. Together, we can find ways to make our budgets stretch further and protect our financial well-being.