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Brexit fears are increasing car insurance costs

It has been revealed recently that due to worries about the outcome of Brexit, car insurance costs have ended up increasing.

According to research conducted by the car insurer AA in January, the cost of car insurance and fleet insurance policies (that is, a fully comprehensive policy) has risen by over 2.7% in just three months. That means that on average, a driver will be paying annually over £609.93. It has also been revealed that the price of premiums has also increased, as a result of a predicted cut in claims costs that will now not come into effect until April 2020.

 

Why is car insurance being affected by Brexit?

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Growing uncertainty surrounding Brexit has led to car insurance costs going up.

As the United Kingdom gets ever closer to the Brexit deadline (28 March 2019) and with no real withdrawal agreement that everyone is happy with being drawn up, uncertainty is growing. Many are concerned about the potential outcome of a ‘no-deal’ Brexit, and this is one of the reasons why car insurance has been affected.

The value of sterling

Another aspect of why car insurance is being impacted is due to the ongoing battle regarding the value of sterling. This battle will continue regardless of what happens when it comes to the issue of Brexit, as the market struggles to maintain the value of the pound.

Why? This is down to the fact the cost of car parts that have been imported have been rising considerably in price. This then has a knock on effect on the costs to the car repair industry. That then affects the cost of premiums that drivers end up paying.

The Civil Liabilities Bill

Another problem causing car insurance to rise is the Civil Liabilities Bill. What exactly is this bill, you may ask, and how does it impact the cost of premiums? This new bill will reduce the cost of whiplash. The Civil Liabilities Bill has already been ratified and was anticipated to come into effect when it became law in December. However, new provisions mean that it will now not actually come into force for another year: not until April 2020. This has all had an impact on premiums, as these were expected to be reduced in line with claims costs savings, which has now been delayed.

How to keep your premiums costs low despite Brexit

Whilst this news is not exactly something you want to hear as a driver in the UK, there are still a number of ways in which you can help to reduce the cost of your premiums. Here are tips below:

Check out telematics

Black box policies could well be an excellent way to keep your premiums low. Black box policies use telematics technology and work by having a small ‘black box device‘ fitted in your car. This then records distance travelled, speed, as well as assessing your driving behaviour. The cost of your premiums will be based upon how your driving behaviour is rated. This is particularly beneficial for drivers under 25, but increasingly black box policies are beneficial for those aged 50 or over, as prices for premiums are rising fastest for those in this age category.

It could also help new drivers. This is because the AA has asked for these new drivers who are using this technology to be exempt from having to pay Insurance Premium Tax (IPT) as a way to reduce the cost of premiums.

black-box-technology

Have you considered installing a black box in order to reduce the cost of your premiums? It may be worth investing.

Increase your excess

If you are willing to pay a higher voluntary excess, then you can reduce the cost of your premiums too. This is because insurance providers assess the cost of your premium on the likelihood that they will have to pay out if you claimed. If you decide to increase your excess, then you are in effect lowering the cost to the insurer.

Adding a named driver

If you are a new driver, under the age of 25 or perhaps have made previous claims or have convictions, then getting a named driver could reduce your premiums. You should look at making sure you add a responsible as well as experienced named driver to your insurance policy, but remember you must be named as the policyholder, or the policy will be considered fraudulent.

 

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