Why are prices going up so much right now?
While you may be used to seeing your premium change each year, this year’s price increases are likely to be greater than previous years’. The premium always takes into account the car and driver being insured and why we do this is explained below.
However, there are other things that aren’t specific to a customer that can affect the price you’re asked to pay, and this is where we’re currently seeing the biggest changes year on year. At the moment the whole industry is seeing increasing claims costs following a period of high inflation.
Car repair costs
Garages are seeing higher bills day to day and have started to pass these costs on. Modern cars often have more advanced technology, making repairs more expensive as well. For example a damaged bumper with built in parking sensors would cost more to replace than one that didn’t have the additional technology. Similarly there are other features that use newer technology, such as cameras in wing mirrors and radar units in headlights, that are having a big impact on the cost to repair cars.
Car hire costs
A shortage of new cars has also meant the costs of these, and of second-hand cars, is on the rise. Insurers are therefore having to pay more to hire cars to keep their customers on the road after an accident. In April 2023, Auto Trader published analysis based on 900,000 vehicles. This showed a 32% year on year increase in 2nd hand car prices, with an annual vehicle value increase of £4,400. More significantly this was the 24th consecutive month where prices rose. You can read their analysis here.
