UK’s car insurance postcode lottery revealed

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Motor insurance premiums rose on average by 4 per cent in the last three months of 2017 – but in some regions the cost of car cover declined.

According to new figures released by price comparison site MoneySuperMarket, UK motorists are being subject to a car insurance postcode lottery with varying cost increases and decreases up and down the nation.

The biggest increase in policy prices were felt in Lincoln, where motor insurance rose on average by 9 per cent – the equivalent of an extra £37. While drivers in Sutton saw their premiums decline on average by 4 per cent, which worked out at a £25 saving.

Car insurance postcode lottery: The cost of cover in the last three months of 2017 rose 9.2% in Lincoln but fell 4% in Sutton, highlighting that drivers face fluctuating premiums dependent on where they live 

Car insurance postcode lottery: The cost of cover in the last three months of 2017 rose 9.2% in Lincoln but fell 4% in Sutton, highlighting that drivers face fluctuating premiums dependent on where they live 

The average fully comprehensive policy in the UK rose from £553.28 in the third quarter of 2017 to £574.11 in the last three months.

MoneySuperMarket said this data was based on analysis of 1.5 million car insurance quotes ran on its site rather than prices drivers actually paid.

Based on its figures, it said Lincoln had been hit hardest at the end of last year, with premiums increasing from £400 in Q3 to £437 in Q4.

That’s nothing compared to East London, though, which is the most expensive place to insure your car with the average quote amounting to £1,091.

The biggest percentage declines were in Sutton and Preston, where motorists reaped savings of 4 per cent and 2.6 per cent compared to the previous three months – the equivalent of pocketing an extra £25 and £15 respectively.

Neither were the cheapest locations for car insurance, though. That honour went to drivers in the Shetland Islands, who were paying an average of £311 at the end of 2017. 

This is Money asked the Association of British Insurers why premiums might fluctuate across the country.

A spokesperson said: ‘Where you live can be a factor in how much you pay for some insurances such as motor or home cover, for example to reflect crime rates. But it is one of many factors insurers will take into account when assessing your risk. 

‘For motor insurance these can include, your age, type of vehicle and driving record.’ 

Motorists in Lincoln experienced the biggest rise in motor insurance costs between the third quarter and fourth quarter of last year, MoneySuperMarket data said

Motorists in Lincoln experienced the biggest rise in motor insurance costs between the third quarter and fourth quarter of last year, MoneySuperMarket data said

Motorists in Lincoln experienced the biggest rise in motor insurance costs between the third quarter and fourth quarter of last year, MoneySuperMarket data said

LOCATIONS WHERE THE COST OF CAR INSURANCE ROSE MOST FROM Q3 TO Q4 2017 
Location Q3 2017 Q4 2017 % change £ change
LN – Lincoln 399.84 436.67 9.21% £36.83
WV – Wolverhampton 689.71 752.54 9.11% £62.82
WF – Wakefield 638.17 693.94 8.74% £55.77
WN – Wigan 628.32 681.62 8.48% £53.30
KW – Kirkwall 301.89 327.16 8.37% £25.28
IP – Ipswich 388.56 419.59 7.98% £31.03
TQ – Torquay 336.12 360.99 7.40% £24.87
KY – Kirkcaldy 343.97 367.76 6.92% £23.79
CO – Colchester 450.18 481.04 6.86% £30.86
ME – Medway 548.80 586.26 6.83% £37.46
Source; MoneySuperMarket.com (1.5 million quotes) 

Despite the increase between Q3 and Q4, the average cost of motor insurance was cheaper at the end of 2017 than it was 12 months prior.

The average comprehensive insurance quote was one per cent lower in the final months of last year, with the average cost declining from £582 in Q4 2016 to £574 at the end of last term. 

That’s despite the change to the discount rate applied to claims pay-outs, an Insurance Premium Tax increase and a rise in fraudulent claims experienced last year.  

Motorists in Sutton saw their insurance premiums decline by 4% in the last quarter of 2017

Motorists in Sutton saw their insurance premiums decline by 4% in the last quarter of 2017

Motorists in Sutton saw their insurance premiums decline by 4% in the last quarter of 2017

LOCATIONS WHERE THE COST OF CAR INSURANCE FELL MOST FROM Q3 TO Q4 2017
Location Q3 2017 Q4 2017 % change £ change
SM – Sutton 628.32 603.45 -3.96% -£24.88
PR – Preston 572.78 557.86 -2.61% -£14.93
GU – Guildford 453.25 444.31 -1.97% -£8.94
DD – Dundee 383.02 375.54 -1.95% -£7.48
BH – Bournemouth 418.08 409.97 -1.94% -£8.11
LA – Lancaster 410.15 402.47 -1.87% -£7.68
KT – Kingston-upon-Thames 509.34 501.41 -1.56% -£7.92
N  – North London 912.80 901.40 -1.25% -£11.40
NE – Newcastle 493.16 487.76 -1.10% -£5.41
SO – Southampton 441.16 436.45 -1.07% -£4.71
Source: MoneySuperMarket.com (1.5 million quotes) 

Women saw the average cost of a fully comprehensive policy decrease by 2.6 per cent in Q4 2017 compared to the same period in 2016, from £543 to £529, while men saw a fall of half a per cent, from £613 to £610.

In terms of age groups, those aged over 65 saw the joint largest average year-on-year cost of a fully comprehensive policy rise seven per cent, from £254 to £273. 

The same seven per cent rise was felt by drivers aged between 21 and 24, though the increase saw their policies leap from £1056 to £1129 – a massive £73 jump. 

Kevin Pratt, consumer affairs expert at MoneySuperMarket, said the changes to the discount rate and a hike in IPT last term were ‘hammer-blow’ to motorists.

He said: ‘It is likely the discount rate will be set at between zero and one per cent at some point in 2018, which should allow insurers to reduce premiums. 

‘We can only hope there are no further increases in IPT, either in the Chancellor’s Spring statement or in the Budget in November.

‘We should also keep an eye on reforms to the small claims process, due in October. Hopefully these will reduce the incidence of fraudulent whiplash claims.’

The ABI spokesperson added: ‘A major contributor to higher motor insurance premiums is Government changes to how personal injury compensation is calculated, and the sooner the Government move to introduce a fairer compensation system for claimants and motorists the better.

‘Insurance is a very competitive market, so it can pay to shop around at renewal to get the right policy for your needs at a competitive price.’

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