Driven Apart: Tackling the Unequal Burden of High Car Insurance Costs
A new report has shed light on the increasing strain high motor insurance costs are placing on UK drivers. Based on data from 6,000 UK adults, the findings reveal a growing affordability crisis, with the number of people priced out of the car insurance market rising by 900,000 in just the last 12 months. This adds to the 1.7 million people already unable to afford insurance for over a year, leaving them unable to drive and highlighting a stark example of financial exclusion in an essential market.
The Hidden Costs of High Car Insurance
The affordability crisis goes beyond those priced out of the market entirely. Many drivers are being forced to make tough financial decisions to cover the rising cost of car insurance. Millions have had to borrow money or cut back on essentials to keep their vehicles insured. Alarmingly, over 1 in 4 drivers (28%) have reduced their level of cover to lower their premiums. While this might save money in the short term, it leaves drivers at greater financial risk if accidents occur, potentially leading to devastating consequences.
Unequal Impacts on Vulnerable Groups
As previous research has shown, certain groups are disproportionately affected by the rising cost of car insurance. This latest report provides further evidence of how pricing and affordability vary significantly across demographics. Some groups, particularly low-income households, people of colour, and those already in debt, are paying much higher premiums than the average driver.
For these groups, the consequences are even more severe. They are far more likely to borrow money or sacrifice spending on essentials to pay for their motor insurance. In some cases, the financial strain forces people to take potentially risky actions, such as reducing cover, to make ends meet.
What Needs to Change
The report calls for immediate action to address this growing crisis and guide the efforts of the recently established Car Insurance Taskforce. With the government’s commitment to improving financial inclusion, the focus must be on targeted interventions to help those most affected by high insurance costs.
Key recommendations include:
Targeted bill support for groups most at risk of financial exclusion, such as low-income households and those already in debt.
Reassessing risk factors used in insurance pricing, including postcode-based pricing and reliance on credit reference information, to ensure fairness.
Implementing bold measures to tackle affordability issues and reduce the unequal burden on vulnerable groups.
A Call to Action
The findings of this report are a stark reminder of the deepening financial inequality in the motor insurance market. With millions of people struggling to afford this essential service, and certain groups disproportionately affected, action is urgently needed.
The Car Insurance Taskforce and government must ensure their efforts address the root causes of this issue. Targeted support, fairness in pricing, and bold reforms are vital to improving outcomes for those most negatively impacted by rising insurance costs.
At a time when many rely on their cars for work, family responsibilities, and everyday life, it’s crucial to create a more inclusive and equitable system that ensures no one is unfairly excluded from the roads.