Online car insurance prices go down while level of protection goes up

10 January 2008 / by None
Car insurance rates for policies bought on the web have dipped for the first time in the last two years, according to Experian's latest Motor Insurance Benchmark report while a new level of cover from Direct Line extends to victims of car crime.

Motor insurance premiums for the last quarter of 2007 were down slightly making it the first fall in the average price since 2005. The 0.3 per cent drop occurred during October, November and December last year compared to 2007 July, August and September 2007. However, despite this, the year as a whole recorded a 6.3 per cent increase in the average online price compared to 2006.

Avis Easteal, Managing Director of Experian’s Insurance Services division, explains: "With the increased chance of road accidents at this time of the year coupled with the problem of uninsured drivers, the average premium will be affected as we move further into the New Year.

"Furthermore, the true impact of the floods earlier in 2007 is yet to manifest itself fully in insurance premiums. As claims are being settled, we are seeing premiums begin to increase. However, the increase is slow and it is worth bearing in mind that consumers will also be aware of the imminent price increases and will start shopping around for a cheaper quote. With the motor insurance industry being as fiercely competitive as it is, the focus on price will increase and it could affect the speed at which premiums increase."

The average price for third party, fire and theft motor insurance during quarter four in 2007 continued to emerge as significantly higher than the average comprehensive premium, mainly because they tend to be related to younger drivers with low or no voluntary excesses. However, motor insurance in the online market for third party, fire and theft for the year as a whole recorded a 2.1 per cent premium reduction compared to 2006.

And for those wanting more cover for their money, Direct Line is extending its no claims discount to include victims of car vandalism. From this month, new and existing customers with comprehensive cover will be protected at no extra cost.

The new cover extends to common damage such as cars being keyed, tyre slashing and car graffiti. Tony Chilcott, spokesperson for Direct Line, comments: "Unprovoked damage to your car is frustrating and distressing enough, without having the added worry of paying for the damage. The likelihood of your car being vandalised rises significantly if it is left unattended for five hours or more. However, for the majority of people this is unavoidable due to long days in the office or being away from home."

The move will be welcomed by the seven per cent of car owners who last year fell victim to some form of deliberate damage to their car, with those living in terraced houses and flats without a garage or driveway, the most likely victims of vehicle vandalism.

© Fair Investment Company Ltd