Motor - why is my car insurance so expensive?

According to the Associate of British Insurers (ABI), motor premiums are on average 25% more expensive at the end of 2023 than they were 12 months previously. So what is driving this, if you will excuse the pun?

Part of it is explained by the rising cost of repairs. Again, according to the ABI, repair costs have risen by a third since the beginning of last year. This is down to a combination of factors: the price of raw materials, wage inflation, the cost of courtesy cars and even the price of paint. Consequently, the cost of repairs to popular vehicles has risen between 12% and 21%. Inflation is now thought to be under control but of course costs aren’t going down and so premiums still remain high.

Another big contributor is the weather. Widespread flooding in recent winters has been very expensive for insurers and images of cars stranded in flood water and the staggering increase in pothole related claims has led to a record number of payouts. The insurer Admiral recorded 1,324 pothole claims in 2023, up 40% from the year before, and of course the more insurers pay out the more their premiums go up. EY have estimated that for every £1 of premium collected, motor insurers are paying out 1.14 in claims and expenses.

To add to the litany of bad news vehicle thefts are also on the rise. The DVLA reported that 64,087 cars were stolen in 2023 which shockingly equates to 1 every 8 minutes. The most stolen car is still the Ford Fiesta, but it is keyless cars which have been catching the headlines, notably Range Rovers. The Range Rover Sport, Evoque and Land Rover Discovery all feature in the top 10 most stolen vehicles and although Jaguar Land Rover are reported to have invested more than £10 million upgrading the security of their vehicles, they are still ‘blacklisted’ by many insurers and especially if they are parked on a London street.

The Range Rover is not alone in being persona non grata with insurers. Electric vehicles (EVs) also evoke a negative reaction. Not only are they more expensive to purchase than their petrol or diesel counterparts but they are also more costly to repair. A lack of EV qualified mechanics is pushing up claim costs, they are reportedly taking 14% longer to fix, and the high cost of replacing batteries means they are often written off. Furthermore, the EVs’ high acceleration may be appealing to their drivers but represents a greater risk factor which is compounded by the fact that insurers do not have years of historical claims data to evaluate them. These vehicles are more akin to a computer on wheels. Their advanced safety features such as cameras and sensors are fantastic, but it is making them all the more expensive to repair or replace.

None of this is likely to make anyone feel better about paying their premium when their motor policy renews, but hopefully it does provide some reassurance that the insurers are not guilty of profiteering and it is unfortunately more a case of them balancing their books.