Why has my car insurance gone up?

The cost of your car insurance will likely differ from the price a spouse, friend or neighbour pays. This is because providers use many rating factors to provide you with a price that’s appropriate for your specific circumstances. Rating factors help insurance companies to determine how likely someone is to make a claim. In this article, we'll look at what personal circumstances can drive price increases, as well as larger issues affecting the industry. 

How are car insurance prices determined?

When you take out insurance of any kind, you’ll be asked many questions. For car insurance, you may be asked your occupation, what vehicle you have, your age, where you live, who else will be driving the vehicle, how long you’ve had your licence, what you’ll be using the vehicle for, and so on.

This information is essential for insurance providers, as they need details to see if they can provide a quote that suits your individual circumstances and needs.

For example: if you've been involved in two car accidents in the last two years, rating factors will indicate an increased risk of claim compared to someone who hasn't been in an accident in five years.

With increased risk, comes higher insurance premiums. In contrast, it can also come down if you are deemed less likely to claim It’s important to provide correct and factual information when getting insurance, otherwise your insurance policy could be void.

Why has my insurance premium increased?

As stated above, the insurance premium for each individual person is calculated based on risk. When any one of these risks changes, you may see a difference in your premium. Here are some of the factors that affect your risk.

Increased mileage

If you’ve increased the amount of mileage you’re doing and have notified your insurer of this, you will likely see an increase in the amount you pay for insurance. The more you’re on the roads, the higher your chance of having an accident.

Vehicle value

Your insurance premium will depend on the value of your vehicle - typically, a Ferrari, for example, would be much more expensive to insure than a Ford Focus. This is because a more expensive vehicle will cost more to repair.

To find the correct price for your vehicle, you could use online car guides.

Occupation change

Ever wondered why an insurance provider asks for your job title? It’s because some jobs are deemed riskier than others, which may have an impact on your insurance. If you’ve recently changed jobs and notified your provider, this could have an impact.

You’ve had an accident

Your car insurance will almost certainly go up if you have an accident and make a claim, which is something we cover further down in this article.

Should car insurance increase every year?

Car insurance generally tends to be more expensive for younger and older drivers. As you get over the age of 25, your car insurance will generally go down each year or stay the same. However, as you approach 70, you may find that your car insurance starts to increase every year.

There are around 50 insurance groups for each vehicle and yours will fall into one of these. These categories are generally based on the price of your vehicle, its engine size and its age. Every 12 months, your car becomes one year older, which may alter the category it falls into and could, therefore, raise your premium. Older cars are more likely to experience issues or problems than newer models. This is why it’s important when renewing your insurance to fill in all the information as accurately as possible.

Does making a claim raise your car insurance?

Usually your insurance premium will increase when you come to renew or buy a new policy, as the rating factors will indicate an increased likelihood of claim. 

When it comes to your car insurance, depending on the insurer, making a claim will mean your no claim discount (NCD) is either lost or reduced, unless you have NCD protection. The longer you go without claiming on your insurance, the bigger the discount you will receive from the provider. By claiming on your insurance, your NCD will be reduced or lost, depending on how many years you have, potentially causing your insurance premium to increase. However, you shouldn’t avoid this by not declaring an accident to your insurance company.

Why are car insurance prices rising in 2024?

Sometimes car insurance costs can be the result of changes in the market or the wider UK economy. In 2024, due to both a rise in the number of claims and a significant increase in how much they cost to resolve, people’s insurance prices are being affected.

How inflation is affecting UK car insurance prices

Inflation is a major driver for rising costs. Below are some statistics that help illustrate why it is having such a big impact this year.

• Cost of vehicle repairs: have risen 32% in the 12 months since October 2022, reflecting rising costs, energy inflation and more expensive repairs. (Source: ABI)
• Labour costs for repairs: up 50% since 2019, due to inflation, shortage of skilled workers and the energy crisis. (Source: Auto Body Professionals)
• Paint: prices went up 20% in 2022 and most claims require paint work. (Source: ABI)
• Courtesy cars: the cost of courtesy cars has jumped 47%. (Source: ABI)

If you do find that your car insurance policy has gone up this year and would like to understand why, get in touch with your provider. They can assess your quote and advise on what factors may be affecting the price.