THE UK’s motor insurance market is facing an alarming acceleration in premium rates, according to the latest report by Consumer Intelligence.

The past year has seen a record-breaking 34% surge in average quoted premiums, with the last quarter alone witnessing a 14.3% jump. This drastic uptick, the largest since the tracking of such data began in October 2013, could potentially jeopardise road safety, especially among younger motorists.

Industry experts have raised concerns about the scarcity of affordable deals in the market for new business customers, impacting younger drivers the most. The under-25 demographic has seen a marked increase of 28% in their insurance premiums over the past year. Despite this being the smallest percentage increase among all age groups, the average quoted premium for under-25s remain significantly higher at £2,145, compared to £850 for the 25 to 49 age group and £568 for the over-50s.

Telematics policies, usually a haven for cheaper quotes and favoured by younger drivers, have seen a reduction in their competitive share from 33% to 30% over the past year, indicating a drying up of lower-cost insurance deals.

“The motor insurance market is witnessing unprecedented premium inflation,” says Max Thompson, Insurance Insight Manager at Consumer Intelligence. “The sudden vanishing of lower-priced deals particularly threatens younger drivers, who are already grappling with higher-than-average premiums.”

Consumer Intelligence has concerns that the potential repercussions this could have on road safety. The lack of affordable options may deter younger drivers from taking insurance, leading to an increase in the number of underinsured drivers or forcing illegal practices such as “fronting”.

Londoners and drivers from the East Midlands have faced the steepest increases in quoted premiums, with respective rises of 39.9% and 37.8%.

Consumer Intelligence has called for action from insurers, government bodies, and industry regulators to address the issue and ensure the safety and accessibility of road use for all, especially younger and more vulnerable drivers.

The car insurance industry is also  full of jargon that can be confusing or easily misunderstood, according to Uswitch.com. With more than 90,000 combined searches for ‘write-off’, ‘mileage’, and ‘market value’ on average each month, consumers are often looking to clarify industry-specific language. As a result, it has never been more important to decipher widely misunderstood car insurance terms.

Uswitch.com identified the average number of monthly global searches related to the definition of each car insurance term or policy, to determine the most confusing terms.

Table 1: Frequently misunderstood car insurance terms and policies

Source: Uswitch.com

‘Write-off’ is the most misunderstood car insurance term worldwide, with an average of 50,250 monthly searches for its definition. This is over four-fifths (88%) more searches than the term ‘SORN’ in fourth place, with 5,890 average monthly searches.

The terms ‘write-off’ and ‘SORN’ both relate to cars being taken off the road; either due to an accident, or when a driver decides to register their car as not being used, which could explain why motorists don’t come across the terms often.

Leoni Moninska, insurance expert at Uswitch.com, said: “If your car has been in an accident or damaged, it will need to be inspected by your insurer to determine if it is safe to drive again.

“If your insurer thinks repairing the damage will cost more than your car is worth, this will be considered a ‘write-off’ and either scrapped or taken off the road for repairs. ”

The term ‘mileage’ is the second most confusing car insurance term to consumers, with its definition being searched 34,430 times on average each month. ‘Mileage’ is searched 79% more than ‘market value’, in third place, with 7,210 average monthly searches. Mileage is one of many factors car insurance companies use to set car insurance premiums, so it is key for motorists to understand what it means.

Moninska added: “Mileage refers to the number of miles your vehicle has travelled in its lifetime and can be checked by looking at service records and MOT history.

“If you have high annual mileage, you can typically expect to pay a higher premium on any car insurance policy. This is because the more you drive, the more likely you are to be in an accident and make a claim on your car insurance.”

‘Market value’ is the third most misunderstood car insurance term worldwide, with an average of 7,210 monthly searches trying to understand the term. This is almost double (44%) the number of searches for ‘comprehensive car insurance’ in sixth place, with 3,990 average monthly searches.

Moninska said: “When a car has been written off, your insurer will usually offer the market value of the car rather than the cost of repair. This is the amount your vehicle would have been worth, or sold for at a reputable dealership, just before it was damaged.”

With SORN vehicles rising by 259,000 in 2020, it may be surprising that ‘SORN’ takes fourth place as one of the most frequently misunderstood car insurance terms, with 5,890 average monthly searches for its definition. This is almost two-thirds (59%) more searches than the term ‘Act of God’ in seventh place — with 2,380 monthly searches — which refers to any event that occurs through natural causes which typically can’t be avoided, such as floods or earthquakes.

The term ‘SORN’ stands for statutory off-road notification. Once you notify DVLA  that a car is SORN, it means that you are confirming your vehicle will not be driven . If you own a vehicle you no longer drive, you can legally avoid paying tax so long as you complete a SORN

‘Black box’ is the fifth most widely misunderstood car insurance term, with 5,370 average monthly searches, despite the fact that there are more than one million drivers with a black box insurance policy in the UK.]. This is more than five times (81%) the number of searches for the term ‘third party car insurance’ in tenth place — with 1,020 monthly searches — which refers to the minimum level of car insurance legally required.

Moninska added: “Telematics insurance, which is often referred to as black box cover, is a device which is fitted into your vehicle to record your driving behaviour. This is to prove to insurers that you can drive safely and reduce the cost of your insurance.

“The black box also measures how, when and where you drive, and your insurance cost can vary according to this. Motorists who regularly drive at night may face higher costs from insurers as accidents are statistically more likely to occur during these periods.

“It also acts as a GPS system which tracks your location and can be used to find your car if it is ever lost or stolen, and to verify claims in an accident.  This can help build up a case with your insurer for a non-fault claim.”