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In the last two years, the average cost of an annual comprehensive policy has climbed 23 per cent to £827, with industry experts believing it’s on course to reach a record high in 2018.
According to Cuvva’s research, one in six (16 per cent) drivers say they won’t be able to afford the running costs of a car if premiums keep rising at this pace. With 79 per cent of UK households owning at least one car, this amounts to more than 3.4 million households facing a driving affordability crisis if insurance prices continue to soar.
Many drivers are already struggling to afford costs, with recent data from MYJAR indicating that millions are taking out loans to cover car expenses.
The situation is even more bleak for drivers in London, where the average annual comprehensive premium sits at £1,283. In Cuvva’s study, one in five (20 per cent) drivers living in the capital said they wouldn’t be able to afford the cost of running a car if premiums carry on rising so fast. According to confused.com, in inner London, annual premiums rose by 30 per cent in Q4 of 2017 alone, with drivers in this part of the capital now paying, on average, £1,599 for their car insurance - £772 above the UK average, according to a car insurance index from Confused.com.
In Cuvva’s study, two in five (41 per cent) UK drivers say that rising costs will force them to find a new way of insuring their car.
According to the research, a growing amount of drivers could be veering towards a pay-as-you-go insurance model, with more one in three (35 per cent) saying they would prefer this to a traditional annual policy structure.
Freddy Macnamara, CEO and founder of Cuvva says, 'A lot of drivers are struggling to keep up with the cost of annual premiums. If they keep rising this year as expected, it’s very possible that we could see a spike in second-hand vehicles coming onto the market as more drivers are forced to give up their cars. We’ve already seen new car sales plummet in the last year and this could be the next step.
'If driving is to remain affordable for the masses, we’ll need to see more innovation in this sector. This could come in the form of better car sharing and borrowing services and more flexibility around short-term car use. We’re already beginning to see the industry modernise, with a growing number of money-saving short-term insurance options now available to drivers.'