Car insurance premiums fall by record levels

There is good news at last for drivers as car insurance premiums fall to their cheapest price since records began.

Car insurance premiums fell by the biggest amount since records began during the third quarter of the year, according to the latest AA British Insurance Premium Index.

The average shop around quote, taken from the five cheapest quotes on the market, fell by £568.32 on a quarterly basis and 12% compared to the previous year.

This marks a welcome change to the historical trend which saw premiums increase by more than 40% two years ago.

Rules tightened on whiplash claims

In the past year the cost of car insurance premiums has been sailing steadily downwards to reach the lowest point since 1994.

This is partly due to increased competition in the insurance market, but also because of anticipated savings from changes in the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) 2012.

Simon Douglas, director of AA Insurance, explained that as the Government gets stricter on whiplash insurance fraud, insurers aren’t having to put so much money aside to cover these pay outs.

Bogus insurance claims have been one of the main reasons insurance premiums have gone up in the past, but Justice Minister Chris Grayling has confirmed that independent medical panels will now be involved with these whiplash claims.

From next year only evidence from accredited professionals will be considered in whiplash claims and therefore “people can no longer profit from exaggerated or fraudulent compensation claims” he said.

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Winners and losers

Drivers aged between 23 and 29 have seen the greatest falls in premiums, with an average drop of 15.5% to £704, followed by those aged 30 to 39 with falls of 13.6% to £492.51 in the past year.

Young and elderly drivers have seen the smallest falls of an average of 4.6% and 4.8% respectively.

As young drivers are most likely to make insurance claims, their premiums tend to be highest. According to the AA one in five teenagers drivers makes a claim within the first six months of driving.

When looking across the country, drivers in Scotland and Yorkshire have seen the greatest price falls of 5.5% to an average of £424.04 and £657.75 respectively.  Drivers living in Anglia have seen the smallest falls of 1.4% to £538.64 as you can see from the table below.

How to reduce your premiums

There are lots of small ways you can help lower your car insurance costs.

The best deals tend to be offered to new customers, so don't just accept the renewal quote. Always shop around and switch insurers regularly to get the best deal.

The less risky your job title, the cheaper your premiums, so changing the title to something less risky, but which still describes your occupation should lower your costs. Downgrading your car and upping the excess will also make it cheaper - although make sure the excess isn’t too much for you to pay should you need to.

Parking your car in a garage, making it more secure, and getting married are all extra ways to see your premium costs fall. A telematics box which measures how you drive and informs your insurer may also work.

You can find out more in our article: 25 ways to cut your car insurance.

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