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  • Car insurance premium change

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  • Car insurance premium split

    Car insurance price changes explained

    Did you know that every insurer now has to highlight what its customers paid the previous year, when they come to renew? This way, everyone can compare prices, clearly and quickly. And because we’re restless in our pursuit to be clear with you, we wanted to explain why your car insurance renewal price could be different to last year – even if you’ve not changed anything. It looks like this:

    The cost of claims

    We want all our drivers to have safe journeys, of course. But it’s not just your own claims history that affects your car insurance premium. We pay millions of pounds every year to settle our customers’ claims – and that cost makes up the biggest chunk of what each person pays us to insure their car - find out more about where your premium goes. While insurance companies are here to absorb higher repair and replacement costs associated with a claim, there are instances where this does have an impact on customer’s premium – for example where there is inflation in the cost of car repairs. Add to that the recent government ruling on compensation payments for those who suffer long term injuries, and the pressure on premiums becomes clear. So let’s all hope our drivers stay safe on the road – that way, we can all benefit.

    Whiplash

    With over half a million claims a year, and the numbers rising steadily, the increasing costs to settle whiplash claims affect every car insurance customer. This is why the Government will be addressing this issue through the upcoming Civil Liability Bill.

    Insurance fraud

    According to a 2016 report by the Chartered Institute of Insurers, insurance fraud costs policyholders up to £50 per year. Whether that’s ‘crash-for-cash’ or exaggerated medical expenses, it’s the innocent who end up paying the price. So we’re working hard to stamp out fraud, and stop this crime from hurting us all.

    Taxes

    Nobody likes paying taxes – that’s something we can agree on. Unfortunately, though, taxes make up part of your price. Take Insurance Premium Tax (IPT) for example. Between November 2015 and June 2017 it went up four times – from 6% to 9.5%, 10% and then to 12%. That’s quite an increase that every insurer needs to include on every policy. If IPT continues to go up in future, this may unfortunately impact your future premiums when it’s time to renew.

    Convictions

    It’s important to tell us if you’re convicted of anything when you take out your insurance. We also need to know as soon as possible if you receive a non-motoring conviction or are banned from driving. For other motoring offences, please tell us when you renew your policy. A motoring offence could increase your premium, but only until it is spent.

    Your No Claims Discount (NCD)

    If you’ve driven for a year without making a claim, your car insurer will reward you with a discount. It’s a little thank you for driving safely.

    Even if the price has gone up for any other reason, you can rest assured that your No Claims Discount saves you money – your car insurance renewal would be a lot higher without it.

    Why a change to your details could change your premium

    It’s important to make sure your car insurance is always correct and right for you. It means you have the cover you need every time you take to the roads – and we have accurate information to put things right with less fuss if you ever need to make a claim. Informing us of any changes, big or small, will ensure that you’re paying the right premium.

    When any of your details change, you must let us know. It’s quick and easy to do this with AXA – you can simply log in to your AXA Account and update your information yourself. And the best thing is, there are no extra administration fees when you make changes yourself online.

    Some changes, however, can affect the price of your insurance – either as soon as you make the change, or when it’s time to renew. Here are some of the reasons why it could go up or down:

    Changing your car

    It may be stating the obvious, but if you’re changing your car, you need to update your car insurance. If you’re buying a more powerful or more expensive car, you would probably expect to pay more for your insurance. And you’d be right – we calculate prices based on risk to other road users, and also potential repair costs if there was a claim.

    But it may not always be what you’d expect. An older car could be more expensive to repair, if the parts were more difficult to get hold of. And did you know that diesel engines have historically cost more to fix than petrol ones? Rest assured, when you change your car, we’ll work out the right price to take care of it based on all the data we have for your new model.

    Changing your address

    Location, location, location! Where you live is very important, and that’s true for your car insurance too. Because we don’t just base your quote on your car and your driving history – we take into account the people using the roads with you too.

    Here are some key factors that could see your car insurance go up or down when you move home:

    • The number of accidents in the area
    • The number of whiplash claims and personal injury claims in the neighbourhood
    • The amount of traffic using the nearby roads
    • Crime and vandalism reported nearby

    As a general rule of thumb, if our data for these four things shows high numbers for a particular postcode, then premiums in the surrounding area are likely to be higher too. So it’s doubly good news if you’re moving to an area where we’ve seen fewer claims – it could be a safer place to live, and your car insurance could cost less too.

    Customer misrepresentation

    Our experience shows that other people’s behaviour can affect all premiums. It’s very important, therefore, that all our customers answer questions honestly for us to assess their true risk.

    The unfortunate reality is that some customers in the insurance market will choose to answer questions incorrectly, to get their insurance at a lower price – for example, where they park overnight. This behaviour leads to all customers, including those who answer honestly, being charged more money to cover the additional risk a policy is based on.

    Changing your drivers

    Naming other drivers permanently on your policy can affect your premium. We take into account the risk of the named driver, plus drivers like them, based on the overall claims statistics and likelihood to be involved in an accident.

    Adding temporary drivers – or lots of drivers on the same policy – generally puts the price up. This is because the drivers are not so familiar with your car, and are often more likely to make a claim than you.

    Convictions

    It’s important to tell us if you’re convicted of anything when you take out your insurance. We also need to know as soon as possible if you receive a non-motoring conviction or are banned from driving. For other motoring offences, please tell us when you renew your policy. A motoring offence could increase your premium, but only until it is spent.

    Claims

    Our experience shows that other people’s behaviour can affect all premiums. It’s very important, therefore, that all our customers answer questions honestly for us to assess their true risk.

    Making a claim won’t change the price of your insurance straightaway, but it’s likely you’ll see an increase when it’s time to renew – especially if you were at fault. Even if you were not to blame, making a claim with any car insurer could unfortunately put up the price next year, particularly if what was paid to settle the claim couldn’t be fully recovered from whoever was responsible.

    Even if you think it could affect your price in future, it’s important you tell your car insurer about any damage, accidents, or incidents involving you or your car.. As well as managing your car insurance claim, your insurer will add it to an industry-wide database (called the Claims and Underwriting Exchange). This is very important because if you don’t make a claim but someone else reports it, it could affect your ability to buy car insurance in future.