Car insurance mythbusting!

Worried about your premium prices? Today, let’s cut through the noise and misinformation, to help you save.

Food, energy bills, and now insurance – it’s the latest bill to skyrocket. As an insurance broker, we’re acutely aware of how much premiums are going up by, and how painful that is to swallow. With inflation remaining stubbornly high, against a backdrop of home fuel prices still higher than they were pre-2022, and drivers being overcharged at the pump, it is incredibly frustrating to see insurance premiums rise as well.

You may have already received a renewal price shock or be worried about what your upcoming renewal has in store. And rightfully so; average car insurance premiums have risen by £338 over the past 12 months to hit £924.

Home insurance premiums have risen because of inflation and substantial weather events, such as flooding, freezing temperatures, and heatwaves. All of this has led to an increase in claims. And unfortunately, there is no way around it, during times of hardship, the number of insurance claims rises as those who may have previously repaired their home or car themselves, are now claiming on their insurance.

There’s lots of noise online and in the media about this issue, and crucially, what you can do to get a better deal on your premium. But a lot of this advice can actually stray into misinformation. Yes, it’s important to save money, but it’s also vital that your policy covers you for what you need and remains valid in the case of a claim!

So, let’s break down why things are increasing, address some myths and misconceptions to get to the truth of the matter, and crucially, explain how you can get a better deal. Whether that’s with saving money, getting more for your money, or ideally BOTH!

Fact or fiction?

1. “Electric vehicles are part of the problem.”

The verdict = TRUE

Electric vehicles are more expensive to insure, that’s true. And, findings do indicate a growing number of electric vehicles could be contributing to car premiums rising, as replacement parts are more expensive when compared to a standard motor vehicle. It’s a combination of sourcing the parts, the repairs taking longer, and garages needing more space to fix EVs compared to standard vehicles.

But they are not solely to blame. There are around 31.7m cars on UK roads, and just 424,000 are electric or hybrid. Yes, EVs have played a part, but replacement parts and repairs for petrol and diesel cars are also much more expensive, due to other factors, which we’ll also explain!  

2. “Global supply chain issues are still at play.”

The verdict = TRUE

Geopolitical factors like Brexit and the war in Ukraine have wreaked havoc on supply chains, leading to delays in repairs and materials.

In 2020, insurers started to experience supply chain issues, meaning it was taking longer for car repairs and costing more, and therefore clients were in hire cars for longer. For example, courtesy car costs have increased by 30%, and paint costs are up by 33%. Unfortunately, this cost is now reflected in motor insurance premiums.

3. “The cheapest policy is the best policy.”

The verdict = FALSE

Lots of insurance aggregators offer a ‘no frills’ kind of cover, which is often the cheapest option. However, as it’s the most basic policy, it may not suit your circumstances and what you need from your cover.

By working with a broker, like Howden, you can access a comprehensive range of cover, that could actually offer you better value for money, in the long term.

4. “I can tailor my policy to suit me and save money.”

The verdict = TRUE

Yes, you can absolutely find a policy that works for you. Consider changing your excess, adding excess protection, taking advantage of the discounts available, such as limited mileage policies, and adding secondary drivers. These can all affect the price you pay.

Just make sure that any decisions you make are informed ones. An expert insurance broker can help you find the cover you need, at the right cost, and could also help you make any midterm adjustments you may need.

It’s important to remember that the ‘loyalty penalty’ ban is channel specific, depending on website journeys or use of telephone lines. Plus, an online aggregator may only offer you one product at a time, rather than giving you access to comprehensive range of products like a broker can.

5. “Shopping around can get you a better renewal rate.”

The verdict = TRUE

Auto-renewing is often an ‘easier’ option. But if you usually sort your cover directly from an insurer or a comparison site, you could be missing out. An even better option for you could be to work with a broker, like Howden, who can do the heavy lifting for you!

Then, you don’t have to trawl through comparison sites, entering details over and over again. Our advisors have great relationships with a panel of insurers, which means they can find you the right cover at the right price. And, when it next comes to auto-renewing for the following year, you can be confident that you’ve got the right cover for the right price.

6. “The loyalty penalty ban has done nothing to help consumers.”

The verdict = FALSE

The ‘loyalty penalty’ was banned from the end of 2022 and means that insurers cannot charge existing customers more than new ones. It has made things fairer for consumers, but with premiums rising across the board due to other factors, it’s been tricky to assess just how much of an impact the ban has had. But in general, insurers do reward loyalty.

7. “You can trick comparison sites into giving you a better quote by changing things like your job title.”

The verdict = FALSE

You may have seen this advice doing the rounds recently, but we strongly advise against it. By entering the wrong information about your occupation, household, or driving habits, you risk your policy being invalid. If it came to a claim, you could find yourself in a sticky situation.

Insurers can also pick up via their data if you’re putting different information into platforms, like comparison websites. So, repeatedly changing your risk information to see what is the cheapest could actually see insurers ‘no quote’ your risk. Any information you input must be true and factual, but if you are in any doubt, our expert advisors can help.

8. “The best time to renew is three weeks before my policy ends.”

The verdict = TRUE

Forward planning is key. Premium prices can fluctuate, and the best time to renew your policy is three to four weeks before your current cover ends. Whatever you do, don’t wait until the last minute, as this is when your renewal quote will likely be much higher.

9. “You can reduce expensive premiums for young drivers by putting someone more experienced as the primary driver.”

The verdict = FALSE

Getting a young or inexperienced driver insured on their own vehicle can sometimes be a bit of a challenge. They’re deemed as higher risk, and their premium price often reflects that. Still, we’ve seen some extraordinary examples online, with quotes worth thousands and thousands of pounds.

One way of trying to make the price more affordable, is to add a named driver to the policy. However, make sure you put the new or young driver as the named primary.

If you try to get around high premiums for young drivers by putting someone older or more experienced as the primary driver, you’re actually committing a type of fraud called ‘fronting’ – and you could find yourself in serious trouble.

The other consideration is your No Claims Bonus. Having a vehicle in your own name as a young driver can be beneficial, to help you build up your NCB. So, in short, whoever owns the car should be the named driver, and the one insuring it.

10. “Insuring my home and car through one company could save me money.”

The verdict = TRUE

It all depends on your circumstances, but there are loyalty discounts available when you bring another product to be insured, so switching your home cover to the same provider as your car insurance or vice versa. You could also pay a little extra for excess protection, so that if you did claim, you’d get what you paid in excess back in effect. Our insurance experts at Howden can use their knowledge and experience to find cover that suits you and your household.

“I’m a good driver, of a reasonably priced car, and have never claimed. Why am I having to fund everyone else’s insurance claims?”

It’s a natural reaction to have, especially if your renewal quote comes in much higher than you thought it would.

With higher prices all around, we want to change the thinking to ‘pay more, expect more’. Shopping around is the right thing to do, but with the time it takes to obtain numerous quotes, with big variations on cover, sifting through the fine print, and risking a ‘no quote’ scenario, it’s a huge hassle.

Our branch teams are here to help you, when you need us the most, in person, or over the phone. Whether that’s changing you to direct debit to help manage your finances, or advising you on ways to tweak your policy, we’re here for you.  

You’ll also be able to speak to our branch experts about our new Money Savings eBook. You see, we’re on a mission to not only help you save money on your insurance, but also on your shopping, energy bills and more! Click here to download your copy for FREE.

Find your nearest branch here to speak with a local advisor who can help.

Sources: Consumer Intelligence, ABI, Which?, BBC News

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