The cost of running a car doesn’t just involve paying one single monthly payment. There’s the cost for owning or leasing the car, filling up at the petrol station, taking into account any service or maintenance repairs, and the much-discussed price you pay for motor insurance.
With the roads almost empty at the start of lockdown, and the levels of traffic only now starting to creep back up, are you potentially paying too much for insurance?
Today’s focus is on the impact the pandemic has had on the world of insurance and whether not you could find a cheaper deal the next time your premium is due for renewal.
Refunds and Premium Rates
With less wheels spinning than normal, the chances of tarmac collisions are lowered, and the main reason why some insurers have been handing refunds out to drivers. The likes of Admiral, LV, Churchill, and Direct Line have already pledged to ‘give back’ and are using the money usually put aside for claims to ease the burden of the current situation.
Not only that, due to the reduction in claims, the cost of premiums has plummeted, with the average cost floating around £697 in April this year. The next time yours is up for renewal, it might be worth shopping around for new customer deals.
You don’t need to wait for insurers to contact you regarding refunds or lower premiums. Check if you can update your current situation online or via the telephone. They will explain what can be done.
Payment Breaks
With cars parked on drives and people required to stay at home to help stop the spread of the virus, weekly commutes, journeys to visit family, and UK holiday road trips came to a sudden stop. From out of nowhere drivers found themselves in situations where they may have been furloughed or out of work, and desperately needing support for what can be a hefty expense.
To put this into context, numbers of vehicles using roads and motorways has decreased by more than 60 per cent since 16 March 2020. At the start of this year, this type of statistic would be unthinkable.
Your car might not be on the road, but legally it always needs to be insured. To ease this headache, the financial regulator — known as the FCA — announced that companies must consider giving payment holidays to those struggling. You should get in touch with your insurance provider to see what help and flexibility they can provide.
Pay-by-mile Insurance
If the pandemic and its impact on how you travel has left you wondering why you’re paying a certain price for far less travel, then you may be re-calculating the amount of miles you’ll clock by the end of 2020. Not only that, but your working arrangements may also have changed, or you might only need the car on weekends or short haul journeys — like the essential shop. Having the ability to pay for the miles you drive would no doubt be suitable to a lot of drivers right now.
Finding a gap in the market is commonplace in every industry, and a venture called By Miles is the latest ‘disruptor’ to offer drivers an insurance alternative.
Backed by Commerzbank Group’s venture capital arm, the company secured £15 million of funding recently, and have a target market of drivers who drive less than 7,000 miles in a year, which on face value, could tick the box for mileage clocks all over the UK.
Adding some statistics to the theory, the AA asked nearly 20,000 drivers whether they would drive less following the end of lockdown, with 22 per cent saying that would be the case. Whilst it’s not a majority, it still a sign that there could be shift in behavior from some road users.
If all this venture does is offer more choices when you shop for new policies, then it’s a welcomed addition for drivers. But, the proof is in the pudding — with an app that lets you track your miles, a spike in April sales, and an overall figure of 39 million miles insured, it’s safe to say they’ll definitely be able to compete with the ‘big players’ in the market for the time being. Still, it will be interesting to see what the future holds. It’s likely that innovation and adapting to a new normal will be on the business plans for motor insurances companies all over the globe, not just the UK.
The next time you look at new cars and know that you’ll be spending less time traveling coast-to-coast, up and down motorways, or working from home more often, then the pay-per-mile concept might help you seek an alternative to fixed premiums. If not, for now, make sure you speak to your provider and see what can be done.
