However, a leading car insurance comparison site has revealed that while falling fuel prices might help your wallet they also have a negative impact on your expenditure. Over the last three months car insurance premiums have risen for the first time since 2011 – and it is drivers taking to the roads in greater numbers that are to blame. Keep reading to find out more.
Drivers taking advantage of lower petrol prices and spending more time on the roads have inadvertently caused car insurance premiums to rise. That’s the result of new research from a leading car insurance website which has found that the cost of car insurance policies in Britain rose in the final three months of 2014.
The average cost of a motor insurance policy rose by £12, or 2 per cent, in the final quarter of 2014 to reach £594 on average. This is the first consecutive quarterly increase since 2011 according to the comparison website which published the research.
The Daily Telegraph reports that ‘the fall, which ended a price war in which insures have cut car cover rates by a third in four years, was linked to more people driving and causing accidents.’
The total number of miles driven on roads in Britain went up by more than 2 per cent in 2014. Stephen Jones, of analysts Towers Watson, said that this was partly because families were able to use their cars more because petrol prices have fallen sharply over recent months.
The RAC says that the cost of litre of petrol is down from £1.33 in the summer to just £1.10 now. Simon Peevers, of the RAC, said that fuel prices at some pumps have fallen to as low as £1.04 per litre and supermarkets have made further cuts in the price of petrol and diesel since the New Year.
Mr Jones added that as heavier traffic led to more crashes insurers have pushed up premiums to protect their profit margins. "Logically, insurers might expect more accidents and more claims [when the use of cars rises]," he said.
Industry figures showed that the number of motor insurance claims throughout the year were "consistently up" on 2013 levels.
Steve Sanders, finance director at the website who conducted the research, said insurance costs would keep rising. "These latest upwards price movements are likely to fuel further speculation that we have passed the bottom of the
insurance price cycle," he said.
Official figures from the Department of Transport have revealed that around 2 per cent more cars – equivalent to 525,000 more vehicles - were registered as being on the road compared to a year earlier.
According to the Society of Motor Manufacturers and traders (SMMT) the rise was partly due to 2.48 million new cars being sold in 2014. This was the highest level in a decade and the fourth highest on record.
In total, drivers travelled 77.9 billion miles in the three months to the end of September 2014, a 2.2 per cent increase compared to the same period a year earlier.