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Product category: General insurance
News Release from: uSwitch | Subject: Car insurance
Edited by the Insidemoneytalk Editorial Team on 28 February 2008

uSwitch comments on the increase in car
insurance premiums

and offers advice for people insuring new cars

Ashton Berkhauer, insurance expert at uSwitch.com, the independent online price comparison and switching service, comments on the increase in car insurance premiums and offers advice for people insuring new cars: "Recent figures show that car insurance premiums have increased by almost 6% over the past twelve months from an average of £594 at the beginning of 2007 to £629 in the same period in 2008[1] With the new '08' car registration plates due to hit the roads next week, uSwitch.com estimates that nearly 450,000[2] new cars will be snapped up by eager motorists

Buyers have two choices, they can either buy a completely new policy or amend their existing policy.

Either way, they could incur a mid-term adjustment fee which is on average £22, alternatively, a hefty cancellation fee charging anything up to 25%[3] of the refund due may apply.

"Whatever people decide to do, now is the perfect time for motorists to make sure they are shopping around for the best insurance policy before they buy their new car to avoid any nasty surprises.

New cars already carry a significant financial loss through depreciation and drivers can expect to lose an average of £510 a day or £6124[4] in the first year of ownership.

This, coupled with high premiums, could leave some motorists seriously out of pocket.

";Another important factor to consider when buying a brand new car is the write off value as the small print on insurance policies varies substantially.

Some will offer a 'like for like' replacement car if the vehicle is written off in the first 12 months.

However, some providers such as Admiral, Diamond and Elephant actually factor in the depreciation, so if the car is written off in the first month of ownership the driver could lose several thousand pounds.

It is therefore vital that motorists not only check the cost of their policy, but also the small print to make sure they know what they are getting.

"With insurance costs increasing, it's no great surprise to see providers offering a flurry of marketing gimmicks to lure in new business.

Motorists should not be tempted by these deals unless they have already shopped around and it is the most cost effective policy for their needs.

For example, Tesco Car Insurance is currently offering motorists £50 off their shopping or fuel if they choose Tesco for their car insurance policy.

For some people this may represent good value but for just as many it may not.

"At the same time Direct Line is offering to cap premiums for new customers who sign up with them, meaning their premium will not increase when it comes to renewing the policy in the second year.

This could be seen as a way of discouraging people from shopping around for better deals, particularly coming from a provider that refuses to appear on price comparison sites.

Just because the cost of the average policy has gone up it doesn't mean people can't still get a good deal if they shop around." 1.

AA pricing index.

2.

According to the Society of Motor Manufacturers and Traders (SMMT), 449,287 were purchased in March 2007.

3.

CDL/uSwitch.com analysis.

4.

Average depreciation on a new car is £6,124.20 in the first year (What Car depreciation calculator), this is £510.35 per month.

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