Why has my car insurance price increased?

In early 2018 the Association of British Insurers (ABI) released statistics highlighting that the cost of car insurance now accounts for 10% of a young driver’s average salary. But what are the reasons for the rising costs of car insurance?
We’re always doing our best to keep our prices competitive at MORE THAN and regularly review how we price our policies to make sure we give you the best possible value for your cover.

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 2017 and significantly impacts the price you pay for your car insurance. IPT is applied after the premium has been calculated by the insurer, so unfortunately it impacts customers paying higher premiums even more.

Claims and the cost of car parts

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

Since the Brexit referendum in June 2016, the reduced value of the pound 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 been impacted. 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. The intention of this pay-out is to cover the claimant’s future loss of earnings, as well as any care costs.

In March 2017 the Ministry of Justice reduced the discount rate to minus 0.75% meaning that since then, insurers will incur significant additional costs in settling motor claims.


General inflation means the cost of your car insurance rises along with other costs.

What affects your initial car insurance price?

Your age and driving experience

As you get older and you’ve held your driving licence for longer, you’re considered to be more experienced on the roads because statistically you’re less likely to be involved in an accident..

Younger drivers, aged between 17 and 25, typically face paying the highest premiums. All is not lost; if you have a careful young driver in your family then MORE THAN SMART WHEELS telematics black box insurance might be just the ticket!

There’s also a point at which your age is seen to be a higher risk because the chance of you being involved in an accident increases in later life.

Your job

Some jobs mean that you spend more time driving your car for business use or you use it to commute to work during the week. It’s important you select the right level of cover and that you provide an accurate estimated annual mileage. The mileage you drive per year is a key factor in determining your premium, because this links into the likelihood of making a claim.

Two similar job titles can provide two very different prices so it’s important to be as accurate as you can when entering your job title.

Where you live

If you live in a built-up area where the risk of accidents is generally greater, then you’ll pay more for your car insurance. It might be a well-known accident blackspot or dangerous road junction in your town, or you could live near a road with high levels of vehicle crime.

It can vary between nearby postcodes. A car owner who lives on a busy main road may have to pay higher prices because more accidents have been reported there.

Your claims history

If you’ve made a claim within the last five years or have any points on your licence, this will have an impact on the price quoted. You may save money on your car insurance if you’ve not made a claim in the last 5 years because for every year you drive without making a claim on your car insurance your insurer will give you one year's no claims bonus (NCB) that will give you a discount on the cost of cover at renewal.

These discounts are accumulated each year - the more years you drive without making a claim, the greater the reduction in the cost of your car insurance. You can also choose to protect your NCB, so it’s less impacted if you do need to make a claim. 

Your car

A little run about is not only cheaper to run but also cheaper to insure for most people. A larger engine or newer car is typically more expensive to repair. They are also more attractive to car thieves so you can expect to pay more to insure it.

Alarms, immobilisers and other built in security devices may help reduce your premium. The price of your insurance can also vary depending on the safety features of your vehicle. 

The type of cover

You'd think that the higher the level of cover you go for, the more you’ll pay but this isn’t always the case. It’s worth checking the price you’ll pay for each level of cover on offer as well as making sure the one you select meets your needs.

Increase your excess

You can reduce your premium by increasing the voluntary excess to an amount you’re able to pay on top of the compulsory excess if you need to make a claim.

It’s also important to remember that your insurance policy doesn’t just provide cover for your car – it’s also there to protect other road users against accidents you might cause.

Previous new business discounts

Another reason why a your renewal can increase in the first year may be because the insurer has given you a one-off new business discounts or cashback offers the previous year, that won’t be included in the renewal price.

However many insurers, including MORE THAN, give existing customers loyalty discounts as an incentive to buy other products so it’s always worth checking what’s on offer.

Make changes to your policy online

Did you know you can log into your login to your account  to make the following changes to your policy without incurring an administration fee?

•    Change of car
•    Change of address
•    Change of driver

Plus you can view and download your policy documents including your motor certificate whenever you need to.

Find out more about insuring your car with MORE THAN

Related links