Cost of car insurance hits four-year low: Average premium drops to £465 as vehicle use stalls in the pandemic
- The average price paid for comprehensive motor insurance in 2020 was £465
- This is the lowest level since 2016 and down 1% since 2019, data shows
- It is likely costs are down due to the reduced number of vehicles on the road
Car insurance costs hit a four-year low in 2020, as fewer vehicles were on the road due to coronavirus.
The average price paid for comprehensive motor insurance in 2020 was £465, down one per cent on 2019, according to the Association of British Insurers’ latest Motor Insurance Premium Tracker.
This meant the average premium was at its lowest level since 2016.
The figures followed an unprecedented year, which saw many motorists driving far fewer miles than normal due to travel restrictions and lockdowns.
Premiums were at a four-year low in 2020, as fewer vehicles were on the road due to Covid-19
The data also revealed the average premium paid between October and December 2020 was £468, down three per cent on the same quarter in 2019.
However, in line with normal seasonal trends, it was up two per cent on the three months beforehand.
Other factors that contributed to falling premiums included the increasingly competitive nature of the motor insurance market, and greater eagerness among drivers to shop around for the best deal.
Although customers are paying less, car insurers have continued to provide extra help to the UK’s 27million drivers during these difficult times.
They have extended their pledge that, if you must drive to and from your workplace because of the impact of Covid-19, your insurance policy will not be affected.
This promise has been extended repeatedly since the beginning of the pandemic and is currently valid until 30 April.
In addition, the insurance cover of people who are using their own cars for voluntary purposes, such as transporting medicines or groceries, will not be affected until the same date.
This applies to all categories of NHS volunteer responders, including transporting patients, equipment, or other essential supplies, as well as volunteers assisting with the vaccine rollout.
Drivers do not need to contact their insurer to update their documents or extend their cover.
Decrease: The average price paid for motor insurance in 2020 was £465, down 1% from 2019
Laura Hughes, ABI’s manager of general insurance, said: ‘Despite a year like no other, it is good to see that during 2020 motorists continued to get the best deals in a competitive motor insurance market.
‘In addition, the extra support that insurers continue to give to motorists during this uncertain and unsettling time is helping drivers adapt to this new normal.’
Dan Hutson, head of motor insurance at comparison site Compare the Market, added: ‘With fewer cars on the road last year due to lockdowns, working from home and social distancing, premiums have fallen to their lowest level in years. This is welcome news for most households as budgets continue to be stretched.
‘However, these savings are usually only available to drivers who shop around for the best deal at the end of their policy, with our research showing the difference between the average premium and the cheapest premium to be £104.’
Drivers who believe they are paying too much for their insurance can use price comparison sites to see if they could save money by switching to another supplier.
Only a fifth of drivers given refund from insurer
Many insurers have said they are open to adjusting policies and premiums to reflect fewer miles being driven during lockdown periods, as well as to discussing options for those concerned about being able to continue paying their premiums by instalments due to the pandemic.
However, separate research has shown that just one in five drivers received any premium refund from their car insurer as a result of the coronavirus restrictions.
This is despite half of motorists drastically reducing their mileage because of lockdowns, and a rise in people working from home.
Research by Which? found that 49 per cent of car insurance customers saw a major decrease in their annual mileage, but only a fraction told their insurer or saw any premium refund as a result.
The survey also revealed that just 21 per cent of car insurance customers have seen some of their premium repaid.
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