The average car insurance premium fell to a six-year low in the spring of 2021, according to new figures. Data from price comparison site CompareTheMarket.com found the average cost of motor insurance between the beginning of March and the end of May fell by £74 compared with the same period last year.
As a result, the website found the average annual motor insurance policy cost £629 during the spring of this year. That’s the lowest three-month average for car insurance premiums since the third quarter of 2015. Back then, a typical premium was £606.
The spring figures also represent a massive decrease compared with the three months from the beginning of December 2020 to the end of February 2021. Over that period, prices were £24 more expensive. And current costs are £126 lower than when the original coronavirus lockdown was announced in March 2020.
CompareTheMarket.com says the drop in prices is down to the “significant” reduction in car insurance claims during periods of lockdown. The company says this has caused insurers to offer customers “particularly competitive prices” as the postponement of driving tests caused fewer new customers to enter the market.
Those young drivers that have learned to drive are set to see the greatest benefit from reduced premiums. According to CompareTheMarket.com, the average premium for a driver aged under 25 has fallen from £1,155 in the spring of 2020 to £1,093 a year later. However, young drivers are still paying far more than more experienced motorists.
And CompareTheMarket.com says we could all be paying more soon, as the company predicts a rise in premiums as lockdown restrictions are lifted. The firm says premiums are already beginning to rise, and an increase in the number of car journeys could cause more accidents and therefore higher costs.
“Motorists will be relieved that car insurance premiums have once again fallen since household finances have been under pressure from both the pandemic and the prospect of rising inflation,” said Dan Hutson, the head of motor insurance at CompareTheMarket.com. “For those looking to reduce their premiums further, switching insurer is a quick and easy way to reduce the cost when your policy comes up for renewal, especially for younger motorists. Our research shows the difference between the cheapest and average premium is £92 but these savings increase to almost £200 for drivers below the age of 25.
“However, as more cars return to the road, it is worth noting that the cost of insurance could start to increase after rapidly falling in the first few months of the year. As the remaining Covid-19 rules are set to be relaxed and more people head back into the office, we may see more car insurance claims causing the cost of premiums to accelerate back to pre-pandemic prices.”