As cars stood idle in people’s driveways and roads were largely deserted during the UK’s Covid-19 lockdown, the number of claims made on motor insurancepolicies fell sharply.
However, this has not necessarily resulted in lower car insurance premiums. According to some industry estimates, insurers saved more than £1bn during the lockdown but have only passed on some of their savings to customers who have been off the road for months.
This week the Association of British Insurers said the number of new motor insurance claims fell to 324,000 between April and June, down 48% from 678,000 between January and March.
The value of claims settled during the period, which includes existing claims from previous quarters, also declined – but by only 5%.
The ABI said that the average price paid for annual comprehensive motor insurance dropped to £460, a four-year low, during the second quarter and this demonstrated that insurers had been passing on cost savings to their customers.
Some disagree, however. James Blackham, the chief executive of By Miles, which provides cover on the basis of car usage, says the figures suggest insurers saved £1.2bn during the lockdown and that drivers were out of pocket by £38.83 each from April to June.
“If you’re driving less, you should pay less,” he says. “While we applaud the few who offered small refunds, no insurer is doing or has done enough to pass on the savings gained in this period.”
Admiral was the first insurer to offer its customers a partial refund, paying £25 for each of the 4.4m vehicles insured through the firm. LV= followed suit, offering refunds of £20 to £50. Customers had to apply for them, though, and the size depended on their personal circumstances. Churchill, owned by Direct Line, invited customers to fill in a form on its website and calculated refunds based on customers’ reduced mileage during lockdown.
A survey of 1,000 drivers carried out by Tempcover, a firm offering temporary insurance for vehicles, last month showed that four in 10 were still paying the same price for their car insurance, despite using their car less, and one in eight (12%) said their insurance premiums had gone up in recent months. Where premiums went down, only 8% said that the reduction in cost was in proportion to the reduction in car usage.
Gareth Shaw, the head of money at the consumer group Which?, says: “Drivers are right to feel hard done by if they continued paying for an insurance policy that was largely redundant during the lockdown period, particularly if it allowed their insurer to make huge savings as a result.
“Companies should be assessing whether their policies are providing value for money. Firms that act fairly may see that they are rewarded by customers in the future and those that don’t may end up paying the price.”
How to cut the cost
Call your insurer and say you are not driving as much.
Shop around when you renew.
Make sure new quotes or renewal costs reflect your lower mileage (if that is the case) and other changes – for example, if your car is now typically parked at home.
Pay annually rather than in monthly instalments.
Consider increasing your excess but make sure you can afford it if you have an accident.
