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Why can’t I find cheaper car insurance?

cheap car insuranceWhy, oh why, has my car insurance gone up by a massive £95.20? I’ve had no accidents, we’ve not moved house – everything is the same as last year. There seems to be no good reason to whack up my premium by over 40%. I am outraged. I should have a loyalty bonus for sticking with Churchill, not a penalty.
Well, maybe Churchill is one of those companies which save their best deals for new business, I thought. I rolled up my sleeves and applied fingers to keyboard: surely comparethemarket.com could save me now? And, lo and behold, it couldn’t.

The cheapest deal it came up with was a £9 saving at £310.24, which was also with Churchill. It included free breakdown insurance (for the first year) whereas in my renewal quote it was £95.20. This isn’t as good as it sounds. Because when the free deal expires, I’d need to pay for that breakdown insurance on top of the normal car cover (£310.24 plus £95.20). The grand total of about £400 for next year is almost double last year’s (very cheap) premium.

So what’s happened? There’s been an increase in insurance premium tax, of course. That makes me really mad because it’s a penalty on those who act responsibly, in essence. Then there’s this issue of the government tinkering with a matrix used to calculate compensation levels, meaning they’ll be massively higher. Which is great for the victims but not for ordinary policyholders who are underwriting them.

Finally there’s a theory that insurers aren’t making the money they used to from other parts of their business. I think this is a more likely explanation. There’s been a trend recently for lower and lower premiums and it’s finally hit a wall. The deal I got last year probably wasn’t economically viable (for Churchill, it was great for me). The insurer was hoping I might be tempted in on car cover and then get house or pet insurance from them as well (I didn’t).

You can only run loss-leaders for so long before it becomes just that – a loss. When you realise you can’t afford to buy customers any more, you’ve got to put up prices. And it won’t just be Churchill having that experience. Car insurance has been too cheap for too long. I predict higher prices for a long time into the foreseeable future and yet another blow to the Aperol fund.

Can you find cheap car insurance? Tell us where in the comments below. And see the SMM guide to car insurance here.


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Saturday, 20 April 2019