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Car insurance premiums began creeping up in May after falling during the lockdown as more people take to the roads with restrictions being lifted.
The average premium rose £36 to £715 in May, up from £679 in April, according to price comparison site comparethemarket.com. This figure represented a four-year low as millions of cars stayed idle during the height of the country’s lockdown. Insurers faced fewer claims and therefore charged lower premiums.
Britons have been slowly returning to work in recent weeks with the population urged not to use public transport, leading to a rise in those commuting by car.
Despite the recent rise, premiums were still around £50 cheaper than before the coronavirus outbreak put the brakes on the economy. Between January and March, the average annual premium cost £755.
Dan Hutson of comparethemarket.com said: “This is a great time to lock in an affordable insurance policy,” he said.
Drivers concerned about rising premiums and have renewals later in 2020 may be able to switch their policy now while premiums are lower. However, additional exit penalties may apply.
The average cost of car insurance has been increasing for several years. This is due to changes in Government policy – such as increasing the insurance premium tax – and delays to whiplash reform that have driven up the cost of claims.
However, during the lockdown insurers saved an estimated £1.3bn from a 70pc reduction in car accidents.
In May, the Financial Conduct Authority, the City watchdog, said insurers must ease the burden of high premiums on those struggling to keep up with their payments.
Mr Hutson said he “hoped” premiums would fall in the coming month as the FCA forced providers to be more considerate of customers’ financial circumstances. However, renewing policies now would protect drivers if this were not the case and costs began to rise.
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