The cost of car insurance has fallen to its lowest point in seven years, with experts calling it a consequence of the coronavirus pandemic.
According to research conducted by Money Supermarket, the average cost of fully comprehensive insurance in the UK fell by £73.32 to £417.06 – a fall of 15 percent – in the first quarter of 2021, which represents the biggest quarter-on-quarter drop on record.
The firm claimed that, as drivers have been covering fewer miles, and there is a reduction of the number of vehicles on the roads, there is more competition for insurance sales, which causes insurers to lower premiums.
Meanwhile, fewer miles driven has led to fewer claims – which makes insurance more profitable and allows providers to reduce prices and pass this benefit on to customers.
From January to March 2021, every region across the country has benefitted from a reduction in the average cost of fully comprehensive premiums, Money Supermarket said.
In the West Midlands, policies were £101.54 cheaper between January-March 2021 than they were from October-December last year on average, representing a 17 percent fall in costs.
This is the largest drop of anywhere in the UK.
Yorkshire and the Humber, the North West, the North East and the East Midlands all saw prices fall by 15 percent.
Premiums for fully comprehensive car insurance are cheapest on average in the Crown Dependencies (£276.25), as well as the South West (£291.08) and Scotland (£324.31) and they are most expensive in London (£607.73), the firm added.
The cheap car insurance bubble ‘could burst’
“Extra competition for sales is causing insurers to lower premiums, as fewer claims means that insurance is more profitable and providers can therefore reduce prices and pass this benefit on to customers,” said Andy Teasdale, car insurance spokesperson at Money Supermarket.
“However, it is likely the bubble will burst at some point as lockdown eases and driving – as well as accidents and claims – start to rise again.
“It is unclear how many of those who have been working from home during the last year will potentially reduce their time in the workplace. If there is a significant shift, it could mean that we can enjoy lower premiums for longer.”
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