Rising car insurance premiums

Andrew Yule explains why insurance premiums can go up

Wednesday, January 07, 2009

I’m often asked “why doesn’t my car insurance come down every year – I haven’t claimed”?

It would be great if you kept on getting a lower and lower price but the reality is that insurance is like anything you buy. The price sometimes goes up.

That’s not because the insurance industry think you’re a worse driver this year than last. It’s just because the cost of sorting out a claim if one does happen is increasing. For example from April 2008, the NHS can bill the insurance company for £165 if an ambulance is called to the scene of an accident. And that cost has to be factored into everyone’s premium.

Norwich Union and Zurich have both produced detailed information on the reasons why premiums have to increase by small amounts every year. Any insurer that doesn’t increase prices steadily will have to do it in a big hit and runs the risk of going bust in the meantime.

Nobody wants to pay more than they have to, but don’t expect your premium to stand still every year.

 

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