The number of people priced out of the car insurance market jumped by 900,000 in the last 12 months to 2.6 million, according to a new study.
The average cost of car insurance has surged by 40 per cent in the past two years taking the average annual premium to £812 – however some drivers, particularly the young, are being charged thousands of pounds.
The figures come from Citizens Advice who said the situation is now so bad that close to one in five drivers are only able to pay for car insurance by borrowing or cutting back on other essentials.
With certain groups impacted more, the charity argues that the government must consider bold solutions to tackle runaway costs.
For many people, driving is essential for getting to work, buying groceries or travelling to healthcare appointments. But for those who had to cancel their cover in the last 12 months, 77 percent reported that this had a negative impact on their day-to-day life.
The average cost of car insurance has surged by 40 percent in the past two years (Image: Getty)
Citizens Advice found:
- On average, young people (18-34) pay twice as much for their car insurance as middle aged adults (35-54) and 56 percent of young people pay monthly for their car insurance which tends to be more expensive than paying annually.
- One in four (25 percent) people receiving benefits have fallen behind on their car insurance payments in the last 12 months, compared to just over 1 in 10 (11 percent) of drivers overall.
- They are also almost twice as likely to have had to borrow, cut back on essentials, or fall behind on other bills to pay their car insurance in the last 12 months – 33 percent versus 18 percent for all drivers.
- The average cost of car insurance is £546 higher for people of colour compared to white drivers.
The charity said the high cost of insurance means some people are driving uninsured which is putting both themselves at risk of prosecution and massive bills.
Citizens Advice says that steps to curb the increase in car insurance costs are needed and welcomes a new cross-government taskforce created to address affordability for consumers.
But the charity is warning that a range of bold solutions will be needed to tackle runaway costs in the market. This includes challenging insurers to lift the bonnet on factors that impact costs like postcodes and credit scores which drive big differences in prices paid by different groups.
With some facing greater affordability challenges in this market, Citizens Advice also argues the government should explore opportunities for targeted support to help those most at risk.Dame Clare Moriarty, Chief Executive of Citizens Advice, said: “Car insurance is essential for so many people, whether the car is needed to commute to work, take children to school, or travelling to healthcare appointments.
“But a shocking number of people are being excluded from this market. We’re concerned a hidden affordability crisis is affecting millions of people.
“We welcome commitment by the government to tackle this issue but it’s crucial that nothing is left off the table.
“Bold action must be taken to tackle skyrocketing costs, including targeted support for those struggling most. We need a market that works for everyone, leaving unaffordable insurance premiums behind once and for all.”
Martin Lewis’s Moneysavingexpert.com team have identified some to find the cheapest cover including making sure you never auto-renew. Check if you can save by adding a responsible driver to your policy, check if one policy for both your car and home insurance works out cheaper and before getting quotes, make sure you’re on the electoral roll.
They say the cheapest time to get quotes is 26 days ahead of your renewal date. They also say to get the best deals, it’s better to pay annually.