Rising insurance costs affecting over three quarters of car sales, says Startline

More than three out of four (77%) dealers say that rapidly rising insurance costs mean that some cars have become difficult to sell.

Startline’s December Used Car Tracker, which is based on the opionions of 301 consumers and 60 dealers, also reports that half (50%) think that some cars have become effectively uninsurable, so are probably unsellable.

The research also reports that 23% think that it has become well-known among both trade and consumers that certain cars are easy to steal.

The Association of British Insurers (ABI) has said higher costs are impacting the price of cover, with the average price paid for motor insurance at £561, up 29% over the last year (ABI Motor Insurance Premium Tracker, Q3 2023).

The cost of vehicle repairs jumped 32% to a quarterly record £1.6 billion in Q3.  This reflects continued rising costs. Some insurers have reported further Q3 increases of 16% for materials, 15% for labour and 46% for other costs, largely driven by the price of energy. 

The cost of providing replacement cars while vehicles were being repaired jumped 47% to £160 million, compared to £108 million paid in Q3 2022. This largely reflected longer average repair times, meaning that these vehicles needed to be provided for longer.   

Paul Burgess, Startline Motor Finance chief executive, said: “Car insurance premiums are seeing substantial increases during a cost of living crisis when personal finances are under considerable pressure.

“Especially, it appears that some cars are being hit much harder than others.

“Insurance for electric vehicles generally has risen ahead of the market thanks to factors such as parts shortages and storage costs but there are also some petrol and diesel models that the trade and the general public know are targeted by thieves and are perceived as easy to steal. Insurers are either charging huge premiums for those cars or refusing cover completely.”

However, Startline’s research also shows that 33% of dealers believe people rarely think about insurance when they buy a car and 8% of motor retailers try to alleviate the problem by having their own insurance options in place.

Burgess added: “Historically, it is probably true that most people have bought a car and then looked at insurance costs although, given the current situation with rising premiums, that situation may be changing.

“It’s also encouraging to see some dealers proactively looking to help car buyers with insurance by having their own schemes in place. Increased dialogue and co-operation between the motor trade and insurers is one way of helping to keep premiums under control.”