RECENT data from MoneySuperMarket has found that people living in East London now pay the most for car insurance, at more than double the UK average (£986).
It’s well recognised that where you live is one of the biggest factors in insurance premium prices, but how much is Covid-19 having an impact?
According to the data, they found that average car insurance premiums have fallen by £18 during the first quarter of 2020. But with the end of 2019 seeing a strong increase in insurance costs, premiums are still £5 more expensive when compared to the previous year.
But why has there been such a drop in average premiums when compared to last year?
It may very well indicate that insurers have factored in the full impact of the changes to the discount rate, which was reduced by the government last summer.
This discount rate is a figure applied to high-value personal injury car insurance claims. So, with this figure being reduced, many insurers responded by hiking up their premiums to cover costs.
However, with Covid-19 playing a massive role in affecting how we use cars, all these external factors may become redundant. Insurers could be obliged to reduce costs while they will likely be paying out fewer claims, because of less drivers on the road during lockdown.
MoneySuperMarket said that “One unintended consequence of the Covid-19 lockdown has been drastically fewer cars on the roads – which means less accidents and much-reduced claim numbers – so it’s fair to assume this could filter through into lower premiums.
Indeed, we have already seen Admiral Group announce a premium refund of £25 to each of its car and van insurance customers – and other providers could follow suit.
Our research shows that April’s premium prices were at their lowest levels in five years, whether there’s any link to the coronavirus crisis is difficult to say for certain, but it is likely to be a factor.
While the longer-term impact of Covid-19 is more challenging to predict, whatever happens to premiums in the coming months make sure you don’t let your policy automatically renew – as you’ll likely see your costs increase. Always switch your provider before your policy renews – doing so can save you up to £270.”
