Increasing Car Costs Troubling UK Motorists

On average, two-car families in the UK are paying nearly £300 per month for fuel. Coupled with the increasing cost of vehicle insurance, many UK residents are finding it difficult to support vehicle ownership. This signals bad news for the automobile and car finance industries in this region, which already experienced setbacks due to the global economic crisis.

During the first quarter of this year, the regularly quoted premium for auto insurance increased a substantial 5.9 percent, reaching £892. Premiums for the year ending March 31 were 40.1 percent higher than the prior 12-month period, breaking the record of 39.9 percent witnessed during third quarter 2010.

The first quarter of the year is usually not marked by a substantial premium increase.

According to the AA British Insurance Premium Index, fully comprehensive car coverage could average £1,070 annually. The motor insurance carrier Clear Box was launched in June 2010 and features mileage-based rates.

Company spokeswoman Pam Evans said that young drivers are now getting their license in a car that costs £1,000, only to receive a £4,000 premium quote for their first year of auto insurance from other carriers.

Young drivers feel the most pain when theft, fire, and third party coverage increase like they are now. These premiums have skyrocketed as much as 82.15 percent in one year, reaching £1,532.62. The typical premium for a driver age 17 to 22 is £2,431.

This is an increase of 64 percent from one year ago.

The care insurance industry is characterized by big money. Gocompare.com, a comparison site, earned £101.5 million in 2010, paying £11.8 million in dividends to shareholders. Drivers can save money by using these sites or use online comparison results to negotiate directly with insurers.

In the future, mileage-based premiums may become the norm because they enable consumers to cut costs by driving more sensibly.