The average car insurance premium in the UK has reached a record-breaking £500 between April and June, with prices rising by 21% compared to the same period last year. This increase in premiums can be attributed to a sustained rise in costs, including the rising cost of repairs and replacement.

According to a report by the BBC, the average driver’s policy cost £511 during this period. Renewals were priced at an average of £471, while new policies reached an average of £566. The Association of British Insurers (ABI) stated that the £2.4 billion spent on covering vehicle repairs, replacement, and injury during the first quarter of 2023 was 14% higher than the same period in 2022.

One of the main factors contributing to the rising costs is the increase in the cost of parts. The ABI reported that the cost of parts has increased by 21%. This can be attributed, in part, to supply shortages caused by the Covid-19 pandemic. These shortages have led to a black-market trade where thieves strip parked cars for valuable components.

In fact, a bulletin published by the ABI in March revealed that 40% of vehicle repair work was affected by part shortages. Additionally, courtesy car costs for insurers have increased by 30%. These factors have further driven up the overall cost of repairs and replacement, leading to higher premiums for drivers.

Insurance comparison site confused.com reported even higher average premiums than the BBC. According to their quarterly price index, the average premium between January and March was £776, the highest since they began reporting in 2006. Confused.com also noted that the increase in premiums could be attributed to the General Insurance Pricing Practices (GIPP) that came into effect in 2021.

The GIPP prohibits insurers from charging repeat customers more for a policy than a brand-new customer. In response, insurers adjusted their pricing, resulting in increased prices for new business. This change in pricing practices has contributed to the overall increase in premiums.

Certain demographics are particularly affected by these rising premiums. Motorists aged under 20 face significantly higher costs due to the perceived risk they pose. According to confused.com, 18-year-olds paid an average of £2404 for their policies, while 19-year-olds were charged £2097. These younger drivers also experienced the largest price hikes, with 18-year-olds seeing a 65% increase in premiums compared to the previous year, and 19-year-olds facing a 59% increase.

On the other end of the spectrum, 69-year-olds paid an average of £413 per year, which is a 32% increase compared to the same period in 2022. These age-related differences reflect the varying levels of risk associated with different age groups.

In conclusion, the average car insurance premium in the UK has reached a record-breaking £500 between April and June. This increase can be attributed to rising costs, including the cost of repairs and replacement. Part shortages caused by the Covid-19 pandemic have driven up the cost of parts, leading to higher premiums for drivers. Additionally, changes in pricing practices have resulted in increased prices for new business. Certain demographics, such as younger and older drivers, are particularly affected by these rising premiums. It is important for drivers to be aware of these trends and explore options to find the best insurance coverage at an affordable price.