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Car Insurance Costs Set To Rise Further
Motorists may well see the financial burden having a car places on them increase in the coming months, it has been suggested. Motorists may well see the financial burden having a car places on them increase in the coming months, it has been suggested.
The news comes as research released by Deloitte reveals that the cost of third party car insurance has risen by ten per cent over the last 12 months. In August 2006, the average cost of such a premium stood at 473 pounds. However, a year later the typical policy now amounts to some 519 pounds - with such an increase potentially squeezing drivers' abilities to meet other monetary demands attached to their vehicle such as MOT, tax and fuel, not to mention areas such as credit cards and personal loans.
Meanwhile, the cost of comprehensive car insurance has also risen over the last 12 months - up from 441 pounds to 458 pounds - a growth of some four per cent. Overall, premiums have increased in nine of the past 12 months - the first period of "sustained increases" the firm claims to have taken place since 2003. The news comes despite reports that price comparison websites have helped to curb growth in insurance costs over recent months.
Commenting on the findings, Catherine Barton, insurance partner at Deloitte, said: "The key reason for the increase is insurers seeking to improve profitability. In the past several years, the underlying motor insurance market performance has been deteriorating with insurers' results being buoyed by releases from their reserves. This situation is not sustainable in the long term and, combined with the impact of major events such as the 2007 floods, rates were going to have to go up. We believe premiums will continue to rise for a few months yet."
As a result, Ms Barton recommended that despite rising insurance costs, those who take the time to scour the market should still be able to find a competitively-priced policy. She added that those who fail to shop around are "likely to have seen bigger increases" on how much they are paying for premiums, which in turn may impact upon their ability to service debts accrued via secured loans, overdrafts and credit cards.
The study from Deloitte follows findings by the RAC that running costs for vehicles run into thousands of pounds. Carried out last month, the findings highlighted that it costs some 5,627 pounds to keep the average family car on the road every year, with fuel, tax, maintenance and insurance expenses accounting for just under 2,000 pounds. And with depreciation costs also rising, those looking either to sell or purchase an automobile should do so with care as otherwise they may find themselves on a "one-way road to debt".
Meanwhile, consumers aiming on purchasing a car may be well advised to apply for a personal loan as Brian Spinks, head of lending for the firm, suggested that in doing so they could be left with more "bargaining power" at the showroom. He added that those looking to take out a loan to fund the purchase of a vehicle should not only ensure that they will be in a position to meet monthly demands for payment, but also that they can afford to cover the day-to-day running costs. The study also showed that the average loan taken out for a vehicle purchase stands at just below 10,000 pounds.