Why Does Car Insurance Cost So Much?

If you are careful and have never made a claim on your car insurance, it can be annoying to find that the price still goes up. Of course your car insurance premium is partly based on your claims history and personal details, but some of the other factors are beyond your control.

One important reason why car insurance costs are going up is that people today are more likely to sue for compensation for personal injury. Both the number of claims and the compensation payouts are higher than ever before, and we all cover the cost of these claims via more expensive premiums.

Of course if you are unlucky enough to be hurt by another driver, you may really need any money you can get in compensation, especially if your ability to work is affected. This is one cost that shows no sign of decreasing, and indeed it may be in all of our interests to accept this change.

You may be surprised to learn that the National Health Service can claim for the costs of treatment, which would be paid by the insurance companies. The NHS charges can include accident and emergency treatment as well as any ambulance costs.

A very aggravating reason for the increase to your premium is that a significant number of drivers break the law by driving without any insurance. If you are in an accident caused by an uninsured driver and your car is damaged, although your insurance policy will cover you the company cannot claim back that money from the guilty party's insurance company, so you could lose your no claims discount and have to pay an excess.

It is believed around one in twenty drivers do not have insurance, with even larger numbers occasionally having uninsured periods of a few days from time to time if they are between policies. Remember that you are legally obliged to have at least third party insurance if you are driving in the UK, so do not get caught out.

Ironically, anyone who doesn't have car insurance now is perhaps even less likely do get it as the price continues to increase. It is believed that we all pay about thirty pounds extra on our car insurance to make up for their lack of cover.

In the current financial climate it will come as no shock to you that another factor in the price of your car insurance is the general performance of the stock market. In a very bad winter for example, you could expect more accidents and more claims, so the insurance companies have to ensure the funds are available.

Insurance companies invest in the stock market until it is needed to make a payout. Let's hope that the current financial crisis does not lead to higher car insurance premiums for you and me.