SCOTLAND has one of the lowest rates of motor insurance in the UK, research has revealed.
The average insurance cost in Scotland is £648, with only the south west of England enjoying a lower average price of £636. This compares to the highest average price in London at £1,460, followed by the West Midlands at £1,171 and the North West at £1,045.
The data was compiled by comparison site comparethemarket.com for its Premium Drivers Index, which looks at the monthly percentage difference between the cheapest and average quotes across all age groups.
Dan Bass, the comparison site’s head of motor insurance, said car insurance premiums were well known for being a postcode lottery.
Prices are based on levels of collective risk and claims data gathered over time. A number of factors could affect these, such as fewer claims being made, the age of the population and the likelihood of theft, among other things.
Mr Bass said: “Motorists in cities such as London pay much higher compared to other parts of the country because claims are more likely to be made in urban areas where there is a greater risk of a collision or of car crimes, such as vehicle theft.”
The research also showed the average price across the UK had hit a record high at £714 this quarter, a rise of £60 (nine per cent) year on year.
Comparethemarket.com said premiums tend to rise in the winter months, so the increase may be in part a reflection of the natural seasonal price uplift. Usually prices typically fall in January and February, so analysis in the next quarter will be crucial in determining if the price increase will be a continuing trend.
However, the comparison site also attributes the rising costs to the increase in Insurance Premium Tax (IPT), which has now been increased three times by the Treasury since 2014.
A rise in the standard rate from 6 per cent to 9.5 per cent came into effect on November 2015, with a new rate of 12 per cent to come into effect from June next year.
As a direct result of these measures, the comparison site estimates drivers will have to pay £109 more for their insurance than they did two years ago.
The research also showed drivers are not taking advantage of the best deals, with the cost difference between the cheapest and average premiums at its widest point since September 2012.
Between September and November 2016, the price difference between cheapest and average policies reached £123 per driver — an increase of £17 compared to the same period 12 months before.
Over the last month alone, the price of the cheapest motor insurance premiums, blended across all age groups, has risen by more than £20 to £608. And the average premium has risen even more steeply by nearly £30 to £738.
Mr Bass said this was down to people accepting their current quote, which would be likely to become more expensive when it is renewed.
He said: “The cost of insurance at the moment will be an unwelcome gift for most motorists this Christmas. The potential saving of £123 shows renewal prices and cheapest price quotes are getting further and further apart, which may suggest insurers are increasingly relying on customer inertia.
“The only way to mitigate these rises and encourage competition among providers is for consumers to shop around.”
He added: “This inertia sends the wrong message to insurers that drivers are content with their current cover, even if prices increase every year.”
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