CHEAPEST CAR COVER FALLS TO SIX YEAR LOW DESPITE RETURN OF TRAFFIC
- Cheapest premiums plunge on average to £533 over summer – a six-year low – so drivers could miss out on an average of £98 by auto-renewing instead of switching to another deal
- Average annual car insurance premium falls by £71 year-on-year (Jun-Aug) to £631
- This summer, average premium has dropped from £644 in June to £617 in August, despite Department for Transport figures showing traffic has returned to pre-pandemic levels
- Young drivers can save an average of £201 by shopping around rather than renewing their policy
7 October 2021 – The cheapest average premiums quoted have tumbled over the summer to just £533 - a £60 drop year-on-year. This is the lowest quarterly average for cheapest premiums available since summer 2015. The fall in the cheapest average premiums has driven up savings available to motorists. Drivers can save an average of £98 on their car insurance by switching to the cheapest deal when their policy expires.
The average annual car insurance premium declined by £71 year-on-year across the summer months (June – August), according to the latest Premium Drivers research from comparethemarket.com. The average premium now stands at £631, compared with an average of £702 for the same three-month period in 2020.
In each lockdown since March 2020, the cost of car insurance had fallen due to fewer cars being on the road and a subsequent drop in claims. Insurers had used savings from fewer claims to offer lower premiums to customers. However, the average motor insurance premium has also declined in recent months, from £644 in June 21 to £617 in August 21. The fall in premiums over the past three months is surprising, as more Covid-19 travel curbs were relaxed and road traffic increased in this time. In fact, road traffic has reverted to pre-pandemic levels with car use returning to 98% of its February 2020 level, on average in August 2021, according to figures from the Department of Transport1. This more recent fall in premiums suggests insurers may be competing more aggressively to attract new customers.
Young motorists can benefit from the greatest savings by switching car insurance. The average premium for drivers aged under 25 has decreased to £1,085, falling from £1,134 in the same three months (June – August) in 2020. If young drivers shop around for the cheapest deal on average when their policies come up for renewal, they could typically save £201 on their car insurance.
Drivers can use comparethemarket.com’s premium tool to check if they are paying too much for their insurance based on their age, location, and the value of their car.
Ursula Gibbs, director at comparethemarket.com, said:
"Many motorists will be thrilled that the cost of car insurance has fallen. Premiums were expected to increase as traffic, and claims, returned to pre-pandemic levels. Instead, insurers have continued to cut the cost of car insurance for new customers. As the FCA's new rules that ban loyalty penalties come into force at the start of 2022, insurers may be particularly keen to attract customers from rivals ahead of this deadline.
"Drivers should take advantage of this situation by shopping around for a cheaper deal when their policy ends. Motorists may lose out by choosing to auto-renew their policy if the price given by their insurer is roughly the same or slightly cheaper than last year. Our figures show motorists could save almost £100 by switching to the cheapest premium available. These savings increase to more than £200 for drivers below the age of 25."
Notes to editors:
1 Department for Transport Statistics - Transport use during the coronavirus (COVID-19) pandemic – Average car use figures between 1st August 2021 and 31st August 2021
All other data is sourced from comparethemarket.com.
When the “average price” is referred to, this is the mean average of the top five cheapest prices presented to a customer, where a consumer has clicked through to buy. Buying from the top five cheapest prices presented represents 90% of all car insurance sales. When the “cheapest price” is referred to, this is the average cheapest price presented, where a customer has clicked through to buy.
Premium Drivers calculates the cost of premiums where the customer has clicked through to buy the policy. If the average premium cost was instead calculated on the basis of all prices returned then the average cost would be significantly higher.
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