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Why is car insurance expensive?

Car insurance is compulsory for all drivers but a number of things are causing it to get increasingly more expensive – it’s a cost that sometimes prices certain drivers out of the market, either forcing them onto public transport or they choose to drive without insurance.

Repair cost

Cars are filled with more and more technology. A simple windscreen is just a sheet of glass, but many modern cars have a lot of technology attached to that windscreen such as cameras for autonomous emergency braking, rain sensors for automatic wipers and light sensors for automatic headlights.

Wing mirrors are the same. A simple wing mirror is cheap but almost all are now electric, some with heaters and cameras.

Nose-to-tail accidents are among the most common type of accident and the nose of a vehicle now often contains proximity sensors and radar cruise control.

Add to this the cost of upskilling mechanics to be able to fit these new products and the cost to garages of expensive diagnostic equipment to check for and repair any problems.


While it’s true that the internet has automated some car insurance processes that were manual, the gradual rise in wages and other costs has an impact on car insurance


Insurance fraud, for example crash for cash, adds a cost to everyone’s insurance premium.

The ABI (Association of British Insurers) reports that the vehicle insurance industry detected 125,000 cases of fraudulent claims in 2016, worth £1.3 billion. This is around 2,400 fraudulent claims valued at £25 million that are detected every week. How many get through?

Whiplash claims

Whiplash is a difficult condition to diagnose as it doesn’t show up on X-rays or scans. Around 1500 people claim for whiplash every day in the UK and it costs £2 billion per year and adds getting on for £100 to every person’s insurance premium. The average compensation is almost £2000, although the Ministry of Justice has suggested putting a cap on it at about a quarter of that which would save potentially £1.5 billion per year.

Uninsured drivers

There are at least one million uninsured drivers and they cause a great many accidents. Around £30 of every car insurance premium is because of uninsured drivers not paying their fair share.

Overall risk

Despite all the technology to help prevent accidents, the number of vehicles on the roads is rising leading to a greater probability of having an accident with another vehicle. People still make mistakes and therefore the overall accident and injury rate has stopped dropping.

Address profiling

Certain postcodes are more expensive to insure a car in due to historically high claims. It could be that moving around the corner saves you a few quid. Inner city areas tend to be more expensive to insure in because crime rates are higher and you’re less likely to have a garage than in a rural area. Insurers don’t update their records on location-based crime that frequently, so it is possible that even if an area has become safe, insurance companies might be penalising you for it.

Darren has owned several companies in the automotive, advertising and education industries. He has run driving theory educational websites since 2010.

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