Motor insurance costs surge by a fifth with record high costing almost £90 more

The average price paid for motor insurance has surged by just over a fifth (Image: GETTY) The average price paid for motor insurance has surged by just over a fifth (21 price), or nearly £90 in cash terms, over the past year, to reach the highest levels since records started in 2012. An analysis of 28 million motor insurance policies found the average price paid in the second quarter of 2023 was £511, up seven percent from the previous quarter. The Association of British Insurers (ABI) said ‘sustained cost pressures’ is what has pushed the price of motor insurance to record highs. Combining all motor insurance claims, insurers paid out paid out a total of £2.4 billion for theft, vehicle repairs, and personal injury – in the first quarter of this year, they said.  The average premium paid for private comprehensive motor insurance in the second quarter of 2023 was up seven percent on the previous quarter. The ABI said sustained cost pressures have pushed up the price of motor insurance (Image: GETTY) In the second quarter of 2022, the average price paid for motor insurance was at £423, however in the second quarter of 2023, it was £511, up £88. The  ABI  said ‘sustained cost pressures’ faced by insurers, such as vehicle repairs, energy costs and labour rates, have pushed up the price of motor insurance. This was a 14 percent increase compared with the first quarter of 2022. With the cost of living heavily inflated over the past year, energy, repairs and parts have continued to rise at a rapid pace. As the cost of living crisis continues energy, repairs and parts have risen at a rapid pace (Image: EXPRESS) In the past year, vehicle repairs have increased by 33 percent, reaching a total of £1.5 billion – the highest figure since the ABI started collecting this data back in 2013, and the costs of replacement parts for many popular cars have increased by as much as a fifth. One insurer had even observed a 40 percent rise in labour rates between June 2022 and January this year. They urged anyone concerned about being able to afford their insurance to speak to their motor insurer to see what options might be available. The ABI’s latest tracker shows that in the second quarter of this year, the average price paid by motorists renewing their cover rose by £36 on the previous quarter to £471, while the average premium for a new policy was up by £21 to £566. These figures reflect the different risk profile of new and renewing customers. For example, a new customer may be more likely to be a younger, less experienced driver, the ABI said. Financial Conduct Authority (FCA) rules on the pricing of motor and home insurance introduced last year ensure the price paid by renewing customers is no greater than that charged to an equivalent new customer for a similar policy bought through the same distribution channel.  But the rules do not set or cap the level of premium paid. Mervyn Skeet, the ABI’s director of general insurance policy, said: ‘These continue to be tough times for many motorists and motor insurers alike. ‘With many families facing higher cost-of-living bills, no-one wants to see the cost of their motor insurance rise. ‘Insurers remain determined to ensure that motor insurance remains as competitively priced as possible, but this has become increasingly challenging, given the continued rising costs that they are facing. ‘We would urge anyone concerned about being able to afford their insurance to speak to their motor insurer to see what options might be available. And despite cost pressures, it can still pay to shop around to get the policy that best meets your needs at the most competitive price.’