- Motorists in the capital can pay up to three-times more for car insurance
- Every London borough is more expensive for insurance than anywhere else
Motorists in London are paying up to 323 per cent more for car insurance than drivers in other parts of the UK, shocking new research has found.
Using the example of a 33-year-old female teacher who has a clean driving licence and a 10-year no claims bonus, researchers looked for the best quotes to cover her £20,000, 23-plate Ford Fiesta in each local authority area across England, Wales, Scotland and Northern Ireland.
Unsurprisingly, the policies for living in major urban areas were more expensive.
The driver seeking cover for the car in Haringey was quoted £2,197.03.
If that same teacher moved to Torridge, Devon, they would pay £519.48 for exactly the same cover – placing a massive tax on motorists living and working in the capital.
The research was released as new data shows that car insurance claims jumped by a third during the first three months of 2023.
According to the Association of British Insurers, 30 per cent of a car policy’s cost covers potential injury payments, with 20 per cent used to repair the driver’s vehicle. Damage to other vehicles and property accounts for a further 19 per cent of the policy’s cost.
The insurance company will take on average 17 per cent to cover its overheads, while theft, replacement vehicles and uninsured drivers each account for a total of 12 per cent of the quotation. The final 2 per cent of the insurance policy is used to pay windscreen claims.
The government then takes a 12 per cent insurance premium tax, which disproportionately affects those living in higher risk areas.
According to Howard Cox, FairFuel UK Founder and Reform UK’s candidate for Mayor of London, he is being inundated by angry Londoners feeling the pressure on their wallets.
He told MailOnline and This is Money: ‘There is no justification to fleece quality experienced drivers with a clean driving record by hiking insurance premiums for simply living in London.
‘Along with the greedy unchecked fuel supply chain, drivers are seen by other big business as easy to rip-off cash cows. As London Mayor I will hold these insurance tyrants to account and expose their dishonesty.’
The research was conducted by Forbes Advisor, who checked the price of insurance across 3,102 different postcodes with a range of providers using a comparison website.
If the 33-year-old teacher was living and working in PM Rishi Sunak’s Richmond constituency, she could expect to pay £556.65.
But if she was living near 10 Downing Street, that same car would cost her £1,684 to insure for 12 months – a ‘capital tax’ of more than £1,100.
That is enough to fill the fuel tank of the car almost 19 times, and according to Ford’s figures, should be enough to keep her on the road for 10,000 miles.
Waltham Forest, which neighbours Haringey, would cost £1,460 – which is £53 more expensive than Telford and Wrekin – the worst insurance spot outside the capital.
Kevin Pratt, car insurance spokesperson at Forbes Advisor, said: ‘It’s interesting to see how much prices for car insurance change throughout the UK. If plotted on a map, the areas that occupy the top 10 cheapest quotes list are widely spread across the country.
‘On the other hand, all the local authorities where car insurance is most expensive are London boroughs, which underlines how expensive it is to live in the capital.
‘Wherever you live, if you’re a driver, car insurance is a legal requirement. When considering your options, it’s important to remember that the cheapest premiums might not provide the level of cover that you need.
‘There are other factors to consider beyond price, such as how an insurer treats its customers and handles claims. That’s why it’s always worth taking the time to consider which providers will offer you the best value cover.’
An ABI spokesperson told MailOnline and This is Money: ‘A customer’s postcode is just one of many factors that an insurer will consider when assessing risk.
‘It can provide a range of information about the area from the density of traffic and history of traffic incidents to the vehicle crime rate, alongside other details the insurer will look at such as age, driving record, the type of car and its intended use.
‘Our motor premium tracker, the only one based on the actual price paid by the customer rather than quotes, shows the average cost of comprehensive motor insurance is currently £478. Motor insurance is a competitive market so it’s always worth shopping around to get the best deal for your needs.’
However, consumers have been warned that deferring payments by signing a credit agreement with the insurer rather than paying in one lump sum can cost them up to £300 extra a year.
While those who have keyless cars and have their vehicles stolen face having their claims denied by their insurance company unless they took additional measures to prevent high tech ‘relay theft’.
The Association of British Insurers, which represents the industry said its members paid out £2.4bn in motor claims between January 1 and March 31 this year.
This, according to the ABI was a 14 per cent increase on the same quarter last year. Personal injury claims, such as those for whiplash cost £642million – an increase of two per cent over the same period in 2022.
The ABI said whiplash reforms introduced in 2021 may be having a positive impact on controlling the cost of injury claims associated with road traffic collisions.
Laura Hughes of the ABI said: ‘Motor insurers continue to deliver when motorists and personal injury claimants need them the most.
‘Like most other business sectors, motor insurers face sustained cost pressures which they are finding increasingly challenging to absorb. Despite this they are doing all they can to ensure competitively priced motor insurance, as well as offering the best possible claims service.’
According to the ABI, the increasing complexity of cars is making it more expensive to repair vehicles, while longer repair times and rising second hand costs are all putting pressure on quotations.
Between January and March, some 599,000 motor insurance claims were settled, with a cost of repairs of £1.5bn – a 33 per cent increase on 2022.
Worse still for hard-pressed motorists, payments for stolen cars have increased by 29 per cent in the first three months of this year to £152 million.
Earlier this week, insurance industry representatives appearing before the Treasury Committee pushed back at perceptions that firms are ‘profiteering’ during the cost-of-living crisis.
During the hearing, Charlotte Clark, director of regulation at the ABI highlighted ‘significant cost pressures’ including costs related to cars.
Cristina Nestares, chief executive of Admiral UK, told the hearing on Wednesday: ‘The average of when you pay the claim could be two years.
‘First, because the accident can happen in the next 12 months, secondly because when the claim is paid depends on the complexity, if it’s a damage claim, windscreen or maybe if it’s a large bodily injury claim. So on average, it could take two years.’
She said two years of inflation ‘is what you actually need to apply to every policy. Actually you see that we’re not profiteering.’
Recent figures from the ABI showed that motorists typically paid £478 for private comprehensive cover in the first three months of 2023, which was a 16 per cent increase compared with the first quarter of 2022 and the highest figure recorded since premiums cost £483 on average in the final quarter of 2019.
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