Why is car insurance so expensive?

24th January 2019by Joanna White

Car insurance is a cost that seems to be so overwhelmingly expensive, but it’s also something that’s imperative to have in order to keep you protected in the event of an accident whereby you need to make a claim.

The cost of car insurance is so expensive for a few reasons, but mainly because the cost of claims is high; meaning that car insurance companies need to ensure they can pay out for any claims made.

The list below shows various reasons as to why car insurance is so expensive.

What you need to know – why is car insurance so expensive?

Car insurance only seems to be increasing in price, much to the dismay of many drivers, but you may be wondering why is car insurance so expensive?

This list shows you exactly why car insurance is so expensive, and why you’re required to pay such high premiums, simply to keep you protected in the event of an accident or incident on the road.

The cost of fraud

The cost of fraud is one of the main factors in why car insurance is so expensive. If a driver makes a claim that is false (e.g. they make a claim for an injury as a result of an accident that wasn’t as severe as they claimed) then the overall cost of insurance prices will go up.

While this may seem unfair, it’s estimated that over 125,000 cases of claims in 2016 were fraudulent; meaning that it’s not just a handful of people who are responsible for driving up the cost of car insurance.

Furthermore, fraudulent claims in the form of whiplash claims are also responsible for car insurance being so expensive.

It’s thought that claims of this type cost the car insurance industry around £2 billion each year; which in turn causes the price of car insurance premiums to rise by about £90 each year according to large and local insurance brokers

From a personal perspective, there isn’t really anything anyone can do to prevent this from happening; there are fraud detector bodies in place to try and put and stop to it and if you yourself don’t make any false claims, hopefully these types of issues can be resolved as soon as possible.

The insured pay for the uninsured

Unfortunately, it’s not only the fraudulent claims that cause car insurance to be so expensive; uninsured drivers are also to blame.

It’s estimated that there are around 1 million uninsured drivers on the roads in the UK, and these uninsured drivers cost you an average extra £30 on top of your car insurance premium each year.

This is because despite not paying the premiums themselves, car insurance companies must still pay out for claims made by another person who was involved in an accident with an uninsured driver.

Insurance for young and new drivers

Another reason that car insurance is so expensive, particularly for young and new drivers, is because they are deemed to be more at risk as they have very little experience driving on the roads.

Young drivers are thought to pay around double the cost of more experienced drivers’ premiums; often costing them well into the thousands.

The area where you live

This might seem like a very strange factor to be affecting the cost of car insurance, but it’s one that plays a significant part in the cost of your insurance.

Insurance premiums in cities that are thought to be more at risk to theft and vandalism are likely to be higher than those in ‘safer’ cities.

While it seems like an unfair way to determine the price of your car insurance, when it comes to insurance premiums and policies, the price is always factored on risk. Therefore, if you reside in a place that has more crime, especially within the car industry, then you can expect to pay more for your car insurance. To know more about your current insurance premiums you can consider M&S Car Insurance or if you have more than one car to insure consider premiums offered from Admiral Multicar Insurance.

Conclusion – why is car insurance so expensive?

As you can see, car insurance is expensive for a whole manner of reasons. Whether it’s due to uninsured drivers not paying for their premiums, fraudulent claims causing the price to rise, or whether it’s simply because you live in an area that’s deemed as more at risk, the cost of car insurance certainly isn’t cheap.

While you may begrudge paying such high premiums for your car insurance policy, it’s imperative that you do pay, as without a proper policy, you won’t be able to make a claim if you suffer from an incident or accident while driving.