Why Are Car Insurance Premiums Rising?

The motor insurance industry has enjoyed a bumper year of profits off the back of pandemic lockdowns leading to less incidents and subsequently fewer claims - so why have premiums risen in the last month?

As the UK enters its third full lockdown in the space of a year, many drivers will be staying off the roads, but analysis from MoneySuperMarket has found in the last quarter of 2020, premiums rose from £473 to £490. As expected the cost of an insurance policy dropped year-on-year, but there is no clear explanation as to why the late surge in prices through October to December.

Drivers in London were hit the hardest, as ever owning a car in the capital is an expensive hobby, with the average premium in East London topping out at £955. Compare that to Kirkwall where the average cost is just £269, a massive differential.

Top 10 most expensive locations for car insurance premiums:

The ten cheapest locations for car insurance premiums

Kate Devine, car insurance spokesperson for MoneySuperMarket, commented: "With new lockdown measures now in place following the Prime Minister’s announcement on Monday, a major fall in traffic could lead to lower prices – at least in the very short term."