Motorists have been given more bad news regarding the cost of driving this week as it has been announced by the Association of British Insurers that the cost of car insurance premiums is at the highest it has ever been since the ABI started tracking average insurance premiums in early 2012.

It has been found that the average car insurance premium is now £485, which is £45 more than it was this time last year and £1 higher than the previous record which was set last month. Insurers have blamed a 12 percent rise in Insurance Premium Tax (IPT) in the last two years as well as an increase in whiplash claims and soaring average repair bills, which have jumped by a third since 2013.

This comes on top of the new T-Charge launch last week which has hit drivers in London who own a polluting older diesel vehicle, and the rise in car tax which occurred earlier this year. All of which add up to making it one of the most expensive times to own and run a vehicle in the UK than ever before.

Why are premiums so high?

One reason for the increase in car insurance premiums is the fact that there have been changes to personal injury payouts which mean that insurance companies are having to give people more than they did previously.

This is because the amount of interest that an injured party could gain on their payout has been reduced from 2.5% to 0.75% (called the Ogden rate) meaning that insurance companies have to pay the difference, and these costs are being passed directly onto their customers in premium increases.

In light of this, insurance companies have asked the Government to change the Ogden rate again in a bid to make things fair for claimants, taxpayers, and other customers so they are not being penalized for the drop in interest rates and the effect that this is having.

Another reason that car insurance premiums are on the rise is that the cost of repairs has gone up by around a third, which is another increase that insurance companies are having to pass onto their customers.

Car insurance premiums

(Credit – Images Money/Flickr)

Older drivers hit hardest

So who is being affected the most? According to the latest car insurance price index from, female drivers have seen a 13% increase in their car insurance premiums year on year and male drivers have seen a 14% increase, resulting in men paying £116 more than women on average in real terms.

Although insurance companies are no longer allowed to use gender as a factor when working out premium quotes, there are reasons why men are being charged more, including the fact that they often drive more expensive cars with larger engines, and are also more likely to have a driving conviction than women.

With regards to age, 61-year olds have seen a 23% increase in their car insurance premiums over the last 12 months, and 21-year olds have been hit by a 19% rise which equates to around £279 extra per year.

On top of this, 17-year olds now pay the most whereas it had previously been 18-year olds, and their premium will cost them an average of £2,272 per year which is possibly even more than many would spend on their car itself!

With so many different costs that motorists are faced with it is unsurprising that a large number are really feeling a squeeze on their finances, and with the current rise in oil prices expected to result in fuel price rises in November it means that things are set to get more expensive at the petrol pumps too despite drivers enjoying lower prices recently.

Positive news in the Budget a must

A combination of rising premiums, road taxes and fuel prices coupled with the impact of Brexit on the car industry is creating a “perfect storm” scenario on Britain’s roads, which are more congested and polluted that they have ever been. Owning a car has never been more expensive than it is today, it almost feels as if the driver cannot be charged any more for the privilege to drive a car than they are right now.

The Government has the perfect opportunity to take action with the Autumn statement on Nov 22nd. The rumour is that the Chancellor will freeze fuel duty for the 8th year in a row and save everyone 3 pence a litre at the pumps. While this is welcome, I think we are very close to a tipping point where if there is not some form of radical change in Government policy aimed at the cost of being a motorist then I think direct action might be taken by motorists themselves.

What do you think of the fact that it’s now more expensive to be a motorist than ever before? Are the Government basically trying to price people off the roads and get them into public transport? Is being a motorist in Britain fundamentally broken, if so how can we fix it? Let us know in the comments below

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