Our Predictions for Car Insurance Trends in 2023

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Our Predictions for Car Insurance Trends in 2023

What is car insurance?

Having car insurance ensures you are covered financially if the worst were to happen to your car. This could be damage from an accident, theft, vandalisation and fire damage. It means you won't have to dig into your own pocket to pay for potentially huge repair or replacement costs.

Car insurance is a legal requirement for cars driving on public roads. You will be heavily penalised if you are found to be driving without insurance. The minimum level of cover you must legally have is third-party car insurance. This would cover the damage to another person's car, for example in a collision accident, but provides limited cover for your own vehicle.

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How much does car insurance cost?

Car insurance is either made up of an annual or monthly premium. Annual premiums are paid in a single lump sum when a policy is taken out, monthly premiums will require a deposit and a monthly direct debit. There are many factors that come into play that will affect the cost of your car insurance. It needn't cost the earth when you take the time to compare premiums.

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Our Predictions for Car Insurance Trends in 2023

Here is some general information on the trends that we predict will be seen in the UK car insurance market in 2023:

  1. Increasing Premiums: During 2022 and 2021, car insurance premiums in the UK continued to rise due to increasing personal injury claims and the impact of Covid-19 on the insurance industry.
  2. Telematics: The use of telematics technology (which measures driving behaviour and provides personalized pricing) continued to grow in popularity among UK drivers, as it often leads to lower insurance premiums for safe drivers.
  3. Whiplash Claims: The UK government introduced reforms in 2021 to reduce the number of whiplash injury claims and the cost of driver insurance.
  4. Electric Vehicles: The number of electric vehicles (EVs) on UK roads continued to grow in 2021 and 2022, leading to changes in the car insurance market as insurers adapted to EVs’ unique risks and requirements.

This information should be taken as general information and not as definitive data. Data on the insurance markets can change quickly, and the specific circumstances in each case can impact the insurance cost.

What factors are contributing to rising insurance premiums in the UK?

There are several factors contributing to the rise in car insurance premiums in the UK:

  1. Personal Injury Claims: The increasing number of claims, particularly for whiplash injuries, has increased insurance costs for UK drivers.
  2. Covid-19 Impact: The Covid-19 pandemic has significantly impacted the insurance industry, leading to increased costs for insurers and higher premiums for policyholders.
  3. Fraud: Insurance fraud is a significant problem in the UK, with fraudsters making false claims to obtain compensation. This drives up the cost of insurance for all drivers.
  4. Cost of Repairs: Repairing vehicles, particularly high-tech vehicles with complex systems, has increased in recent years, leading to higher insurance premiums.
  5. Regulation: Changes to regulations, such as the government’s recent reforms to reduce the number of whiplash claims, can impact the cost of insurance and result in higher premiums for drivers.
  6. Increased Competition: The competitive nature of the insurance market in the UK can also lead to price increases as insurers try to maintain their profit margins while balancing the cost of claims.

What are the best insurance tips to consider in 2023?

Here are 4 potential money-saving techniques that customers could use.

  1. Review: Carefully review your policy details before agreeing to a policy. Ensure that the policy provides the coverage you need.
  2. Compare: If your insurance renewal is the same or less, there’s still a potential saving by comparing. If your provider has increased your premium, there’s more reason to compare.
  3. Multi-policy: Some providers offer to cover multiple insurance types. Sometimes this can result in significant savings.
  4. No Claims: Remember to declare any no-claims discounts.
  5. Ask: Simply asking whether you can have a discounted rate may get you a better deal.

The 5 items above do not constitute advice. Should you require advice, please consult a financial advisor.

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