What Makes Car Insurance so Expensive?
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Even though you are careful and have never claimed on your car insurance, you may be disayed to find that the price still goes up when certainly affected by your claims history and personal details, there are other factors which are beyond your control.
An important reason why car insurance prices are increasing is the rising number of people claiming compensatin for personal injury. The compensation payouts and the number of people claiming compensation are greater than ever before, and the costs of these claims are shared out amongst us through higher car insurance premiums.
Of course if you are unlucky enough to be hurt by another driver, you may really need any money you can get in compensation, especially if your ability to work is affected. This is one cost that shows no sign of decreasing, and indeed it may be in all of our interests to accept this change.
It may surprise you to find out that the National Health Service can claim for the costs of treatment, which would be paid by the insurance companies. The NHS charges can include accident and emergency treatment as well as any ambulance costs.
A particularly annoying reason for the increase to your premium is the fact that a large number of drivers break the law by driving without any insurance. If an uninsured driver causes an accident and your car is damaged, while your insurance policy will cover you the insurer cannot claim back that money from the guilty party's insurance company, so you could lose your no claims discount and have to pay an excess.
It is believed around one in twenty drivers do not have insurance, with even larger numbers occasionally having uninsured periods of a few days from time to time if they are between policies. Remember that you are legally obliged to have at least third party insurance if you are driving in the UK, so do not get caught out.
Ironically, people who do not currently have car insurance are probably even less likely get it if the price of car insurance goes up. Experts estimate that we all pay roughly thirty pounds extra on our premiums to make up for costs of claims caused by uninsured drivers.
In our current economic climate it is not surprising that the overall performance of the stock market is another factor which can affect the cost of car insurance. Insurance companies do not have all the money they might need for claims sitting in a bank account, rather the money that is not being used is invested in the stock market until it is needed. In this way, if there are a lot of claims, for example if a bad winter leads to more crashes on the roads, then the money is there for claims. The current financial crisis and drop in the value of stocks and shares makes it possible that car insurance prices will have to increase.
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