Why Are Car Insurance Premiums So High?

Car insurance can be a large part of the cost of car ownership, particularly if you own a high end, prestige car. Many things that affect the cost of car insurance are things that you as the driver have little or no control over. You cannot change your age, while things like what car you drive, where you live and what job you do can be difficult to change, and are not something you would change just for your car insurance! Driving sensibly, maintaining your car with regular car services and MOTs, avoiding accidents and motoring offences, and not modifying your car are all things that you do have control over, but there is much more to it than that. The behaviour of all drivers will affect how much everybody’s car insurance premiums cost.

In particular, the growing number of insurance claims for whiplash are driving up the cost of insurance premiums by an average of £90 per year at the moment. In fact, according to the Association of British Insurers (ABI) and the Automobile Association (AA), whiplash claims are contributing to the cost of car insurances nearly doubling. Imagine how much we would all save if we stopped making claims for an injury like whiplash which is usually quite minor as well as difficult to prove.

According to the ABI a massive 570,000 people a year are claiming for whiplash injuries which cost British car insurers £2 billion in 2011. The AA feels that a large number of these are spurious or fraudulent and that the government should act decisively to deal with the issue. The government recently met with a group of insurance companies in order to discuss the possibility of increasing the limit for personal injury claims from £1000 to £5000. This would allow more whiplash cases to be dealt with by the small claims court, hopefully acting as a deterrent for fraudulent claimants who would then be billed for legal costs. Currently it is cheaper for the insurance companies to settle whiplash claims out of court, even when they suspect fraud, and this is what drives insurance premiums up for the rest of us.

The ABI does not feel this goes far enough, and has called for various measures to be implemented. These include requiring whiplash claimants to show medical evidence of injury before being entitled to compensation, either capping or reducing the amount they can claim and requiring assessment by a panel of independent doctors rather than their GP. Some countries also use bio-mechanical evidence to determine a threshold of speed under which whiplash would not realistically have occurred.

The sad fact is that there will probably continue to be fraudulent claims in one area or another of accident claims, so all the rest of us can do is continue to drive sensibly and maintain our cars responsibly. Regular car servicing and MOTs, combined with careful driving will help you to avoid accidents.