15:11 25 November 2012
The latest MoneySupermarket Monitor on Car Insurance has highlighted that car insurance premiums are still falling, with the average policy price reaching an 18-month low of £478.
This will come as welcome news to motorists who have had to pay some of the highest premium prices on record in recent years following a period of sharp inflation starting in 2010 which reached its peak in April 2011, when the average cost of cover rose to £554.
However, with signs that this downward trend may not last, and with the European Court of Justice gender directive about to come into force and possibly increase prices for many women, we're going to take a look at exactly why prices may have fallen and what motorists should expect in the coming months.
And, with a nod to Road Safety Week, which takes place from November 19th to November 25th, we'll also take a look at how a change in your driving habits might not just reduce the risk of being involved in an accident, but might also save you money.
Why have premiums fallen?
The MoneySupermarket Monitor on Car Insurance found that, year-on-year, the average cost of car insurance fell by 11% between summer 2011 and summer 2012, and there are a number of reasons why this was the case.
One reason is that insurance costs generally rise and fall in cycles, and so a period of universal price increases is often followed by a drop in costs across the board as insurers enter into a price war to win back customers and increase their market share.
Another reason is that insurers have been paying out less in claims and so can afford to drop premium prices accordingly. This is primarily because insurers are now better able to detect and throw out fraudulent personal injury claims, something which is thought to cost the industry about £2billion every year and can add up to £90 on the cost of a typical motor policy.
There is also the fact that many of us are now driving more robust cars, with improved safety features which protect us more effectively and suffer less structural damage when involved in an accident. This, in turn has led to a drop in the amount that insurers have had to pay out on repairs, medical bills and claims from third parties.
However, the findings also suggested this trend may be about to reverse as month-on-month data showed how the typical costs of cover went up by £7 between August and September this year, an increase of 1.6%.
The ECJ gender ruling comes into force on December 21st, when insurers will no longer be allowed to take a person's gender into account when calculating insurance premiums. Insurers have traditionally charged women less for cover because they tend to be safer drivers - so it is expected that the ruling will lead to an increase in premiums for women.
We don't yet know how much premiums will shift and whether there will be an impact on the long-term trend for premium levels. If you want to see how much impact your gender, age and where you live affect your premium, simply have a go on this widget...
So with premiums possibly on the increase, and with the roads as dangerous as ever, what action can we taken to reduce the likelihood of an accident and possibly reduce our insurance costs?
Are you driven to distraction?
Although we all like to think that we're safe drivers - it's all those other road users that are the problem - research from the Transport Research Laboratory has found that most drivers only concentrate for 25% of their driving time. The rest is taken up by such things as fiddling with the radio, calling or even texting on mobiles, getting distracted by looking at other road users or things on the roadside or, if you're a white van man, finding ways to annoy everyone else on the road.
So making sure you concentrate while at the wheel - and that includes not getting into heated discussions with your passengers - is one way to ensure that you're a safer driver and lessen the risk of being involved in an accident, not least because you'll be more likely to be able anticipate and avoid one.
Road safety campaigners also urge us to take note of what other road users are doing and to monitor what is going on further along the road, particularly when driving at higher speeds. Much of the advice might seem obvious - such as paying close attention to road signs and speed limits - but it is when we fail to follow the most sensible and straightforward guidelines for safe driving that problems tend to arise.
Another increasingly important message is not to become too reliant on you satnav. Blindly following directions instead of anticipating the road ahead could literally lead you the wrong way up a one-way street.
Here are some more tips that could make you that little bit safer when behind the wheel...
Always keep your distance
The common wisdom is that you should keep a minimum of two seconds space between you and the vehicle in front and this should be doubled to four seconds during low visibility and doubled again, to eight seconds, when driving in more severe conditions such as snow and ice.
And if you find that while you're keeping your distance from the car in front you're getting tailgated by a frustrated F1 wannabe, you will need to build into that space the braking distance of the driver behind who is a bit too close for comfort.
Be aware of blind spots
Be sure to check your blind spots before manoeuvring and avoid driving alongside vans, trucks or other larger vehicles where the driver of the vehicle, or other drivers on the road, may not be able to see you.
Watch your speed
The risk of a fatal accident increases exponentially with collision speed, so not only is there more chance of being involved in an accident if you are driving above the speed limit, there's more chance of it being serious.
So make sure you don't exceed speed limits and always adjust your speed in accordance with the road and traffic conditions - just because 70mph is the legal speed limit on the motorway, it doesn't mean that it's appropriate to be driving at that speed on a wet, winter evening in rush hour.
You also need to pay particular attention to your speed and your surroundings in urban areas where even a relatively slow collision speed is enough to result in a fatality if you hit a cyclist or a pedestrian.
Always plan your journeys to allow to arrive at your destination safely and in plenty of time without breaking the speed limit or driving recklessly.
Make sure your car is well maintained
Making sure that your car is regularly serviced, in accordance with its service schedule, will help to avoid breakdowns and any accidents associated with vehicle faults.
For instance, by regularly checking that your tyres are in sound condition, are inflated to the correct level and have safe tread depths, you can not only reduce the risk of suffering a blow out at high speed but also make sure that they are not affecting your braking, steering and acceleration.
You should also regularly check your lights and lenses, including main beams, side lights, brake lights, fog lights and indicators; your oil levels and consistency; your electrics, including battery, windscreen wipers and blades, demisters and horn. And also make sure you keep your water levels topped-up and use additives to prevent freezing.
By making sure your car is well maintained you should also find that you can cut down on fuel bills and repair costs.
Are you sure you're fit to drive?
You should never drive when tired, after drinking alcohol or taking drugs as they can all seriously impair your driving ability and have a disastrous effect upon your reaction speeds. For instance, if you doze off for just three seconds while travelling at 70mph then you will have covered over 100metres without knowing anything about it - more than enough to cause a serious accident.
Safer driving can also save you money
One of the best ways to save a significant amount on your car insurance is to build up five years' no claims discount (NCD) as this can get you as much as a 75% reduction in the cost of cover. And the only way to build up your NCD is to make sure that you don't make a claim, and the best way to do that is to be a safe and considerate driver.
And ensuring that you're a safe driver will not only reduce the likelihood of you being involved in an accident but you are also less likely to pick up a motoring conviction, something which will not only leave you out of pocket in terms of having to pay a fine, but will also have implications for the cost of your car insurance.
As Kevin Pratt, car insurance expert at MoneySupermarket, explains: "While convictions do seem to be on a slight downward trend, Road Safety Week is still a very timely reminder to all motorists to be aware and considerate on the roads. Our data shows, speeding convictions top the chart for most reported conviction, and not only are motorists who commit speeding offences risking the lives of other road users and pedestrians as well as their own, there is also a significant impact on their insurance costs. Those with multiple convictions may find it difficult to get insurance in future."
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