The current cost of living crisis is definitely putting the squeeze on household finances throughout the UK right now. Inflation is almost at a 30-year high, more pain is just around the corner with energy bills skyrocketing from 1st April, and a tax rise on the way. But what will this mean for insurance premiums?

Car insurance premiums actually hit a six-year low in 2021, but prices could well increase in the coming months. This is according to the Association of British Insurers (ABI), which has published its latest Motor Insurance Premium Tracker results. This tracker records how much customers pay for their cover, rather than what they are quoted. ABI figures showed that the average price paid for a year’s fully comprehensive car insurance in 2021 was £434. That is a reduction of 7% compared to the 2020 average, and the lowest annual average since 2015.

Between 2015 and 2020, the average amount paid for damage to policyholders’ vehicles increased by 59%, whilst the average paid to third parties for damage to their vehicles rose by 32%. This is a significant cost increase for insurance companies. Claims are set to increase during 2022 as road traffic levels return to post Covid levels.

On 1st January 2022, the Financial Conduct Authority (FCA) introduced new rules about car and home insurance policy pricing for new customers, preventing loyal existing customers from being charged more than new customers. Prior to this rule being introduced, insurance companies would often give discounted policy prices to new customers, which usually meant that existing customers saw their renewal prices increased in order to compensate for this.

The FCA estimated the changes would result in a saving of at least £56 for customers who had renewed their car insurance five times or more. However, the abolition of the loyalty penalty may protect loyal customers who stay with one insurer, but it also means that those who regularly shop around will no longer benefit from new customer discounts.

How to get a good deal on insurance

If your car or home insurance is due for renewal soon, don’t panic. Insurance providers are still looking to be competitive on pricing, and with dozens to choose from, there are several good deals available.

Keep the following five tips in mind when you are looking to renew your insurance:

  1. Don’t leave it until the last minute to renew

Your current insurance provider should send you a renewal quote approximately one month before your policy is due to end.  This is the time to shop around, as policies can be cheaper when taken out 21-23 days in advance.

If you are looking for a general insurance policy, then your first port of call may be to look on an online comparison site. These can be a good place to get an idea of what policies are available, but they are not always the most effective way to find the insurance policy best suited to you.

The policies offered on comparison sites are very generic, with limited ‘tick box’ options. You may end up paying for more cover than you actually need or find that a cheaper policy might not give you the cover you require.

  1. Don’t take out unnecessary add-ons

Some car insurance policies come with a range of optional add-ons, for example, legal expenses insurance, breakdown cover, key cover and personal accident cover. In some cases, you may already be covered. For example, if you have breakdown cover through your bank account. Look at what you are already covered for via your bank account or other policies you may already hold.

An Insurance Broker will ask you about your personal circumstances in order to find you a policy best suited to your individual requirements. Insurance Brokers are often able to get you a better deal by comparing prices and policy product features. Unlike comparison sites, Insurance Brokers offer personal advice and can speak directly to the insurance company on your behalf. This means you can have a tailored policy that comprehensively covers you for what you need, ensuring that you don’t pay more for cover that you don’t need.

  1. Set an affordable excess

When you take out a policy, you will be able to set a voluntary excess amount on top of the compulsory excess set by the insurance provider. The combined total of these two figures is what you will need to pay in the event you make a claim. Voluntary excesses vary significantly, with amounts such as £100, £250 and £500 commonly available. A higher excess may lower your premium slightly but setting it too high may prevent you from making a claim in the future. Make sure the voluntary excess that you set is affordable if you ever need to make a claim.

  1. Pay annually rather than monthly

Paying monthly for your car insurance will help you to spread the cost, but you will pay much more over the course of the year. Monthly payment plans effectively involve taking out a loan with the insurance provider, and interest rates can be high. If you can pay for your policy in full at the time you take it out, it is worth doing so.

  1. Find the right insurance provider

The best insurance policy isn’t always the cheapest. Before deciding on an insurance provider, you should ensure they are offering a comprehensive enough policy that provides not only excellent coverage, but also that they will be easily contactable in the event you need to make a claim.

Insurance providers won’t always offer you every available type of cover if you go directly to them, and comparison sites can be limited in the range of policies listed due to the basic information they ask for. Insurance Brokers can talk you through the different types of cover available from various insurance providers, and help you to decide what cover best suits your needs.

If you do need to make a claim, an Insurance Broker will do as much as possible to assist you, easing some of the hassle and worry that comes with this inconvenience. This is a service you won’t get with online comparison sites.

Buckingham Insurance provides our Motor Insurance policy holders with a claims line that can be accessed 24 hours a day, 365 days a year.

Tony Buckingham, Managing Director of Buckingham Insurance says, “Buckingham Insurance was established over 40 years ago and offers a friendly, professional insurance broking service to businesses and individual customers alike. You will find our teams are friendly and knowledgeable, and they will use their expertise to understand your requirements and source the most suitable cover for you at the most competitive price available. If you would like to discuss your insurance needs, please contact us or telephone one of our friendly staff on 01246 575 625 (Clowne) or 01773 748 627 (Ripley). They will be more than happy to answer any questions you may have.”