Drivers driving fewer kilometers, a decrease in road traffic accidents and fewer cars on the roads during the Covid-19 pandemic have triggered the largest drop in car insurance prices in more than six years.
Motorists in the UK are now paying some of the cheapest rates on their car insurance since 2016, and new research suggests the Covid-19 pandemic could be the cause of these significant savings.
A new report from Confused.com found that the number of accidents on our roads has decreased significantly as motorists claim they drive fewer kilometers than they did before the pandemic began.
This, among many other reasons, helps to significantly reduce the amount that motorists now pay for their car insurance.
In early 2021, Confused.com’s quarterly auto insurance price index saw the sharpest annual decline in auto insurance prices in more than six years.
The average price paid by drivers is now £ 538 – a whopping £ 87 less than the same period last year.
That means that insurers have drastically reduced their prices since the beginning of the Covid-19 pandemic.
The pandemic has been a financial challenge for many people, so a reduction in the annual car insurance bill was undoubtedly very welcome.
But why exactly have the prices fallen so much?
New freedom of information data received by Confused.com reports a 26 percent decrease in traffic accidents over the past year.
And according to the data, police forces reported 192,001 road traffic accidents in 2020 – most of them under lockdown restrictions.
That is a decrease from 258,994 in 2019.
This corresponds to 710 reported accidents per day in 2019 and 525 in 2020 on average.
This is arguably due to the fact that the UK’s roads have been significantly quieter over the past year, meaning the likelihood of accidents was much lower.
Between locking and working from home, driving a car has become a novelty for some.
In fact, the number of drivers using their car each week fell from an average of five to three during the pandemic.
And that has resulted in a significant decrease in the number of kilometers people drive each year.
According to the study, the UK’s average annual mileage fell from 7,239 before the pandemic to 4,113 fewer cars once we’re out of lockdown.
For almost two in five (38 percent), this is because they commute to work less often, while almost one in three (31 percent) will make fewer trips around the UK.
Likewise, the number of drivers who took their cars off the road increased significantly at the beginning of the pandemic.
DVLA data shows that the number of people who applied for a statutory off-road notification (SORN) rose from 250,352 to 526,747 between February and March last year.
In total, almost 3.6 million successful SORN applications were submitted last year, compared to 3.4 million in 2019.
That equates to 3.7 million UK drivers who also sold their car during the pandemic, with more than one in four (27 percent) claiming they couldn’t justify paying taxes and insurance on a car they didn’t use.
One in four (25 percent) also stated that they no longer needed the car, while more than one in seven (15 percent) only needed the cash.
With so many cars being sold or sitting in the driveway at home, the number of cars on UK roads was significantly lower during the Covid-19 pandemic, meaning the risk of accidents was much lower than usual.
And this is an important consideration for insurers when offering a price for their auto insurance to a customer.
As the risk subsided, insurers were able to lower their prices to take into account the fact that claims would likely be fewer, allowing motorists to make significant savings when shopping for their auto insurance.
However, it is not just the reduced risk on the roads that arguably contributes to today’s auto insurance costs.
Figures released by SMMT in 2020 show that new car sales in March and September last year were at their lowest level in 10 years.
As a rule, newer cars have a higher value, which means that they are significantly more expensive to insure as the cost of repairing damage in the event of damage would be higher.
Since there were significantly fewer new cars on the road, insurers deal less often with high claims for brand-new cars.
It’s not just car insurance that is helping people save the penny.
The way people use their cars has also changed a lot in the last year, with many drivers saving significantly on their regular expenses.
Drivers say they saved an average of £ 92 per month, or £ 1,104 over a 12 month period.
For most (83 percent), these savings were achieved through generally lower fuel consumption, while almost one in two (49 percent) saved money through shorter journeys.
One in four (25 percent) also saves by making fewer or no repairs to the car.
However, this could be because many repair shops were forced to close in the initial stages of the lockdown when the government announced the TUV vacation – giving people a six-month extension of their TUV certificate.
More than one in seven (15 percent) drivers made use of this – that corresponds to six million drivers.
Lockdown also triggered changes in driver behavior, making some of the environmental impact of their driving behavior more aware.
Emissions were reported to have decreased 10 percent during the Covid-19 lockdown, which could explain why nearly a third (31 percent) of drivers who said they would use their car less in the future said they did do because they were aware of the environmental impact.
Almost a third (29 percent) of drivers even say they will buy an electric car in the future.
Almost one in ten (nine percent) would even try to reduce the number of cars in the household.
While it is clear that the lockdown has helped many drivers save money – something that was undoubtedly welcomed at a very difficult time for many – lockdown restrictions are starting to ease.
While many drivers now think they won’t be behind the wheel that much, having the opportunity to get out and explore or visit family and friends if safe is too good an opportunity to to miss them.
And as traffic slowly builds up over time, we might find the number of accidents creep up, people’s mileage returning to pre-lockout levels, and people looking to invest in newer cars again.
And with that, car insurance prices could rise over time.
But how quickly it all happens remains to be seen.
Confused.com auto insurance expert Alex Kindred said, “We are seeing drivers paying the lowest price for their auto insurance since 2016, something we have no doubt many people will greet after an incredibly challenging and turbulent year .
“And that’s simply because so much has changed since the Covid-19 pandemic last March.
“Our report shows that the streets are much quieter and the police are reporting a significant decrease in the number of accidents.
“All of this means that insurers are less likely to have to pay out claims. And the good news for drivers is that this translates into cheaper prices for them.
“However, if we get out of lockdown in the next few months, things will likely return to some sense of normalcy.
“How this will affect driving behavior remains to be seen.
“Even as insurance prices are rising, there are still ways for drivers to keep costs down – although knowing where to start can be confusing.
“We have put together our top tips – and update your mileage first. If you commute less or take fewer long-distance trips, you can save a few pounds. ”