Why am I paying more for my car insurance?

Do you ever wonder why the cost of your car insurance has gone up at renewal time? In July 2017 the Association of British Insurers (ABI) revealed the average price paid for car insurance in the UK rose 11% compared to the same period last year, reaching a high of £484.

We’re always doing our best to keep our prices competitive at MORE TH>N and regularly review how we price our policies to make sure we give you the best possible value for your cover.

But there are many factors that make up the price of your renewal - ranging from your age, type of car, claims/conviction history and some factors completely outside of your control.

Here are some of the reasons why car insurance costs across the industry are on the up - even for loyal customers and those with no claims history:

Insurance Premium Tax (IPT)

Introduced in 1994 by the UK government, IPT applies to all general insurance premiums and has steadily increased over the years.

IPT jumped from 10% to 12% in June this year and significantly impacts the price you pay for your car insurance.

Claims and the cost of car parts

Claims are becoming more costly for insurers for a number of reasons.

Since the Brexit vote in June 2016, the reduced value of pound sterling has meant car parts are now more expensive to source as they are often manufactured abroad, meaning costs are at the euro rates.

The cost to repair technologically-advanced cars has also had an impact.

Replacing modern car parts after an accident isn’t as simple as it once was.

Whether it’s bumpers with parking sensors or windscreens with rain sensors, these can significantly push up repair costs.

Dishonesty and whiplash

Uninsured drivers add around £30 to the cost of your insurance each year.

In addition, whiplash claims continue to be a significant contributor to claims costs.

The ‘Ogden effect’

The Ogden discount rate is a calculation used to work out how much money insurance companies need to pay to people who’ve suffered life-changing injuries, with the intention of covering the claimant’s future loss of earnings, as well as any care costs.

The Ministry of Justice reduced the discount rate in March to minus 0.75% — meaning payouts are higher at the expense of the insurer.


General inflation means the cost of your car insurance rises along with other costs, at around 1.6%.

It all adds up to a “cocktail of rising costs” for drivers in 2017, according to the ABI. The body also warned that both younger and older drivers could expect even higher than average increases.

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