The price of car insurance has dropped by £39 in the past three months – the steepest quarterly drop in prices in more than two years.
According to the latest car insurance price index by Confused.com, the average price of car insurance now stands at £770 following a £19 (2%) decrease year-on-year, making it the lowest prices have been in more than a year.
It’s the first time that car insurance prices have dropped in over a year, as the coronavirus pandemic forces drivers to stay home.
Only three months ago the average cost of car insurance was just £49 away from the most expensive cost on record.
Cheaper car insurance costs may come as a relief to many motorists as the coronavirus pandemic forces people into financially difficult situations, but drivers are being urged to shop around, as research shows those renewing with their current insurer are not seeing the same savings, despite being encouraged to stay home.
In fact, nearly half (46%) of those who received their renewal notice between April and June this year saw their price increase by £47, on average, suggesting their loyalty wasn’t being rewarded during these challenging times.
However, while automatically renewing might seem like the stress-free option under the circumstances, nearly two in five (39%) didn’t settle for the price increase and shopped around using a price comparison site to switch insurers, resulting in a £61 price saving, on average.
“The UK going into lockdown caused a sharp drop in traffic levels, which means the risk of high claim pay-outs has been lower for insurers over this period,” said Louise O’Shea, CEO at Confused.com.
“This is likely to have contributed to this U-turn we’re seeing in car insurance costs. It’s likely that as lockdown conditions ease, prices will change further as insurers continuously readjust to the situation. We are keeping a close eye on things so that we can update our customers on any changes that may affect them.
“But it seems some insurers are still asking their loyal customers to pay more year-on-year, which isn’t necessarily justified if their circumstances remain the same.
“This is why it’s so important to shop around before committing to renewing, as there will be an insurer out there offering a cheaper price.”