Why has car insurance gone up?

Recently, motorists have seen a noticeable increase in their car insurance premiums, with price rises of over 50% in the last year, leaving the average premium at almost £1,000, according to Confused.com. Several factors contribute to the rise in insurance costs, ranging from economic influences to changes in the insurance industry. In this article, we look at the key reasons behind accelerating car insurance premiums. Reasons behind increasing car insurance premiums: Insurance market The fundamental reason behind increasing motor insurance premiums is that insurers are losing money on car insurance. EY Consultants estimated in 2022 that for every £1 an insurer collects for a vehicle policy, they pay out £1.10 in claims and operating costs. Consequently, some insurers are pulling out of the market altogether and no longer providing car insurance. The insurers that remain have become increasingly selective when choosing what they will cover. Fewer insurers available means less choice and higher premiums for the consumer. Claims inflation We’ve all felt the impact of rising inflation recently, and unfortunately, the motor industry is not immune from its effects. Increased costs associated with vehicle replacements, repairs and parts mean an increase in the cost of each claim. The Association of British Insurers estimated in 2022 that vehicle repair costs have risen by 33%, labour costs have risen by 40%, vehicle parts have risen by up to 21%, and the increased cost of energy felt throughout the motor supply chain has seen an average additional cost of £71.75 on a claim. Supply chain issues influenced by international conflicts and the popularity of used cars are also factors. Technological advances and electric cars In recent years, many more of us have switched to electric cars. While the benefits are numerous, the complexity of these types of vehicles has increased insurer costs. For example, repairing an electric car will require a specialised mechanic and parts; if the battery has been damaged, that may mean the whole car is written off as that is often the most expensive part to replace, and there are strict storage and towing requirements for electric cars that have been damaged to reduce the risk of fire. Vehicle theft Figures show that vehicle theft increased by 59% in 2022, with Range Rover and other luxury SUV models particularly hard-hit. Often, these cars are stolen for their parts, but the spike in keyless car theft has left them much more expensive to insure, depending on the area that you live in. Renewals The Financial Conduct Authority (FCA) introduced rules in January 2022 forbidding insurers from offering cheaper quotes to new customers (motor and home insurance). This means that new and existing customers should be offered the same price when buying the same cover from the same place. While this is fairer, it won’t stop your renewal becoming more expensive. For the reasons outlined above, insurers costs have increased, which is reflected in the price they charge customers. Plus, a range of other factors affect the premium you pay; for example, if you have changed your vehicle, your address, the mileage you do, or made a claim, this will result in a difference in premium. Small changes can make a big difference to the price of your car insurance.

What are we doing to help our customers?

We understand the impact rising insurance premiums have on our customers, so we have taken steps to try and reduce the impact as much as possible, including: Reviewing cover details with our clients. Insurers use real-time pricing when providing us with quotes, so by checking over all the details with our customers before rebroking, we can ensure we don’t need to make any last-minute changes and miss out on a better premium. Rebroking every renewal. For all our existing customers, we are searching the market for the best options prior to renewal. One of the benefits of using a broker is that we search the market for you, so we do this for every renewal so that you can trust we’ve found the best price for you. Rebroking renewals 21-23 days prior to the policy expiring. Statistically, the closer you are to your renewal date, the more expensive quotes will be. By searching the market well in advance, we can find the best prices available.

Motor legal protection; do you need it?

07/02/2024 Blog Alan Boswell Group

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Motor legal protection is usually offered as an optional extra alongside your car insurance, but it’s not always clear what policies cover. To help you decide if motor legal protection is something you need, we look at what’s included and how a policy can minimise financial losses after an accident.

What is motor legal protection?
What does motor legal protection cover?
How much does motor legal protection cost?
Can I buy motor legal expenses insurance as a standalone policy?
What are the pros and cons of motor legal protection?
Is motor legal protection worth it?
Are there any alternatives to motor legal protection?
Do I need motor legal protection?
FAQs

What is motor legal protection?

Motor legal protection pays for your legal costs if you’re involved in a car accident and want to pursue a claim in court. Policies can also cover costs if you’re sued and need to defend yourself.

The amount you can claim for legal expenses is limited. While you can sometimes choose the level of cover, most policies offer up to £100,000.

Motor protection insurance is also known as motor legal expenses.

What does motor legal protection cover?

Policies will vary depending on the specific terms set out by each insurer, so it’s important to check what’s included rather than assume all policies will be the same. Legal expenses policies will only allow you to pursue a claim if there is at least a 51% chance of your claim being successful. However, most motor legal protection policies will give you access to a legal helpline and will typically cover:

Loss of earnings

If you can’t work because of a car accident, you can claim lost earnings. Your motor legal protection would cover the legal costs to pursue your claim against the person (or people) responsible for the accident.

Medical expenses

If you need to pay for ongoing treatment or care after an accident, motor legal expenses can help you recoup this cost. Your policy will cover the legal fees so that you can make a claim against the driver or other third-party that caused the accident.

Personal possessions

This usually covers items you carry with you, such as your phone, laptop, glasses, or headphones. It can also provide compensation for pushchairs and car seats but check your policy wording to be sure.

If you have comprehensive car insurance, it may include personal possessions cover, but check for any limits. If you’ve got expensive items like the latest smartphone, you’ll need a level of cover high enough to cover the cost of a replacement.

Policy excess

If you make a claim on your car insurance, you’ll usually need to pay the excess before your claim can go ahead. If another party caused the accident, that might seem unfair, but motor legal protection can reimburse those costs so you don’t lose out.

Out of pocket expenses

This covers other expenses you might face in the aftermath of an accident. For example, you can use your legal expenses policy to claim back money you’ve spent on a hire car if your own vehicle is being repaired.

Defending a claim against you

If you’re involved in an accident with another driver, and they make a claim against you, motor legal protection will cover the cost of your legal defence fees.

Courtesy car

Policies from Alan Boswell Group provide a hire car or van for up to 14 days following an accident or theft, and the policy would also cover any further out of pocket expenses if you need to hire a car for longer.

How much does motor legal protection cost?

Legal expenses cover is typically offered as an add-on to your car insurance. Policies from Alan Boswell Group cost as little as £35 per year.

The relatively low cost compared to the expense of legal fees makes motor legal protection an option worth considering.

Can I buy motor legal expenses insurance as a standalone policy?

You can buy motor legal protection in a number of ways. Some insurers include it as part of a comprehensive car insurance policy and some offer cover as an optional extra for a small fee. You can also buy it as a standalone policy.

At Alan Boswell Group, motor legal protection is only available alongside our car insurance policy.

What are the pros and cons of motor legal protection?

If you’re unsure whether motor legal protection is right for you, here’s what to think about before making a decision.

Benefits of motor legal protection

Relatively cheap to buy
Will pay for your legal fees so you won’t be out of pocket
Access to a legal advice helpline
Can also cover legal fees if you need to defend yourself in court

Drawbacks of motor legal protection

Policies still cost money (if bought as an add-on), which can tip your overall car insurance premium over your budget.
Claims can be rejected if you don’t have a reasonable chance of winning so there is no guarantee that your policy will pay out.
If it becomes apparent that your case is likely to fail, your claim can be stopped at any point and your insurer will stop paying for your legal fees.

Is motor legal protection worth it?

If you worry about how you might cover legal fees in the event of an accident, motor legal protection could be worth serious consideration, if only for your peace of mind.

Remember that solicitors can charge hundreds of pounds per hour for their time, so legal fees can quickly spiral into the thousands. With that in mind, spending £35 or so on a policy can represent good value for money.

Are there any alternatives to motor legal protection?

If you’re not sure about motor legal protection other options are available, for example:

After the event (ATE) insurance

These are policies you can buy after an accident, but they’re usually more expensive than legal expenses cover. For car insurance claims, premiums could be as much as £300.

In some cases, you won’t be charged an upfront fee, but what you owe will usually be taken out of whatever compensation you receive (similar to a ‘no win, no fee’ arrangement).

No win, no fee representation

Some legal firms offer to handle your case on a ‘no win, no fee’ basis. In other words, you won’t pay anything unless you win.

If you choose this type of service, be sure to check the terms and conditions carefully. There may be hidden costs, and if you win, the solicitor will likely take up to 50% of your compensation. This can mean you lose money as what you’re left with might not be enough to cover your expenses.

Legal aid

Legal aid covers the cost of legal advice but only in specific circumstances. You’ll also need to show why your case is eligible and demonstrate that you can’t afford to pay for legal advice.

For more about how legal aid works and the circumstances it covers, head to GOV.UK.

Do I need motor legal protection?

You don’t need motor legal protection by law. If your insurer offers it as an optional extra, you’re not obligated to buy.

Nevertheless, motor legal expenses offers you another level of protection. It means you won’t have to worry about paying legal fees if you need to claim for losses after an accident (if your car insurance does not already cover them).

For information about our motor legal protection policy, which includes guaranteed 14-day car or van hire following an accident, speak to one of our experts on 01603 649650.

FAQs

Can I claim on legal expenses insurance if the accident is my fault?

No. You can only make a claim if another party is at fault.

Does motor legal protection cover you for uninsured drivers?

If an uninsured driver causes an accident and you want to pursue them for costs, you can use your motor legal protection policy to pay your legal fees.

Do I need motor legal protection on both cars?

Yes, normally motor legal protection covers the vehicle, so if you have more than one car, you’ll need separate policies for each one. However, always check the wording on your policy, just to be sure as there are policies available that cover you as an individual, rather than being linked to a specific vehicle (not available through Alan Boswell Group).

Can legal expenses cover non-motor related claims?

You can buy legal expenses alongside other insurance products (for example, home insurance). But if you specifically buy motor legal protection, it will usually be limited to vehicle related claims.

Is motor legal protection the same as legal expenses?

Motor legal protection is also known as legal expenses (when bought alongside car insurance). Be aware that you can also buy other legal expenses policies with other insurance products. Your policy documents should set out what is and isn’t covered.

Can I take out legal expenses for my motor fleet?

Yes. If you have a fleet of vehicles, you can buy motor legal expenses alongside your fleet insurance.