Why is car insurance so expensive?
Last Modified 16th of February 2021
Well firstly, you’re right it is one of the more expensive annoyances in life and it also seems to be getting more expensive. The truth is though; insurance companies are not making obscene profits – the insurance game really is expensive: No-Win No-Fee I’m afraid a large part of the reason is the rise in the trend of compensation claims. A few years ago there were a lot less of these, but now pretty much any car accident results in a personal injury claim and often the cost is much more than the cost of the damage to the vehicles. The result is that the average claim now costs the insurance companies much more than it used to and that cost has to be reflected in your premiums. Sex Discrimination New EU laws mean that insurance companies can’t offer better prices to women because that is supposedly discrimination; that means that men’s premiums have to come down or women’s must go up. Unfortunately prices are set by statistics, men are higher risk and therefore if the insurance company lowers men’s premiums it will lose money. The result is that women’s premiums will be much higher than they should be. Advertising & Overheads Insurance companies have to make a profit of course, which means that the total value of premiums in a year must be more than the cost of claims and still have enough left over to pay the rent and staff. Insurance is a very competitive industry and all of those adverts cost money. Call centres cost money too, especially the ones based in the UK. Someone has to pay for all of those costs and that falls on the consumer (you). You’re Just To Risky If you have asked this question then you are almost certainly in the group of people who are relatively risky, perhaps because of your age, driving history, address etc… Ask your nan how much her car insurance costs and you might be surprised by just how cheap car insurance can be.
