Explore the Surge in Car Insurance Costs: Unveiling what factors could be behind the rise.

Discover the driving forces behind the recent surge in car insurance prices as we delve into one potential reason that could be contributing to this upward trend.

One possible factor is the escalating adoption of electric vehicles (EVs). The automotive landscape is undergoing a profound transformation with a notable increase in the purchase of EVs. Some manufacturers have even hinted their commitment to exclusively producing electric vehicles in the future. Despite the delay in implementing the ban on new petrol and diesel cars until 2035, the trajectory suggests that prices are poised to continue their ascent.

A surge in EVs brings with it a surge in expenses. These technologically advanced vehicles come with a higher price tag and enhanced features, translating to increased repair costs after accidents. Furthermore, we believe the lingering effects of the pandemic on the supply chain contribute to delays and backlogs in the repair process for electric vehicles.

The financial strain of EVs could prompt many drivers to opt for second-hand cars, which, in turn, retain their value for longer periods. While this is advantageous for owners, it could translate to more expensive claims for insurers in the event of a total loss after an accident. With a shift like this in market dynamics it could contribute to escalating insurance costs for drivers.

Despite the Financial Conduct Authority (FCA) implementing rules in 2022 to ensure fairer insurance prices, the confluence of these factors continues to exert upward pressure on car insurance costs. Explore the intricate web of influences shaping the current landscape of car insurance and gain insights into the evolving dynamics of the industry.

Property Wealth Insurance specializes in evaluating your car insurance needs, meticulously incorporating accurate details to provide specialized coverage tailored to your requirements. Our approach involves crafting comprehensive policies that cover all aspects, offering a one policy covers all solution that leads to substantial savings across your entire portfolio.

Index linking your home insurance

With insurance, there is a tendency to concentrate on making sure those things most precious to you are correctly insured, especially with all of the hype surrounding Watches, Jewellery and investment contents, but very rarely do we talk about the actual building you live in which is often your biggest asset. So why not?

Most clients who approach us have had Buyers Report or Survey conducted at the point they purchased their new home and if the Surveyor are RICS approved, you can be confident that the rebuild costs identified will be accurate to use when you are obtaining insurance. This is great news at the outset but just like jewellery and watches, things change.

Most home Insurance policies will either insure on an Index Linked Rebuild basis which will be automatically updated each year.

SO WHAT IS THE ISSUE?
• Most home Insurance policies will either insure on an Index Linked Rebuild basis which will be automatically updated each year or on a Blanket Cover Basis where the cover can appear to be better than it really is..

• Index Linking is applied by insurers at each renewal based on the current National Average increase in Rebuilding costs. It does not take into consideration that the rebuild costs in London maybe increasing at a higher rate to those in Newcastle for example and there are many reasons why including -

• Cost of obtaining materials in London compared with Newcastle

• Parking costs

• Planning costs

• Permits for clearing of the derelict property following a total loss

• Architects fees, the list goes on.

THE EFFECT OF NOT CHECKING THE INDEX LINKING
Not withstanding any changes you make to your property, at each renewal your sums insured will be updated in line with current Index Linking, but at each renewal a gap may start to form between the actual rebuild cost for your property and how much you are insuring for. As time goes by the gap in what you are covering for and what you need can become huge.

TINA MARLOW, OUR ACCOUNT EXECUTIVE SPOKE OF A GOOD RECENT EXAMPLE...
• A new client approached us earlier this year previously insured through their bank.

• The new client advised that their property was last surveyed over 20 years ago.

• Due to the type of property and other factors we felt that the £888,000 rebuild that was requested maybe too low so we advised the client to obtain a fresh Rebuild cost through RebuildCostAssessment.com. The cost was only £160.00 at the time and quite often, our insurers will provide such appraisals free of charge depending on the insurer.

When the report came back ,the correct Rebuild Sum Insured was established at £1.4m (a 57% increase).

WHAT WOULD HAVE HAPPENED IF THE CLAIM HAD OCCURED?
• Most U.K household policies contain clauses within the wording warning of Misrepresenting the cost required to rebuild their property. Even worse, the majority of standard home policies will have clauses that allow them to reduce the claim by the amount of the under insurance or even void the policy completely leaving your insurance worthless. This also has a double impact as the client will have to disclose the claim being struck out and a policy being voided to future insurers.

• At best this could effect the amount paid out by the insurer and they would have only received £888,000 leaving the client to find the money to rebuild their property properly.

WHAT ARE THE BENEFITS OF CHECKING THE REBUILD?
1. Just because the sums insured went up by 57%, the premium only increased by 25%

2. By having a RICS approved survey conducted within 5 years, many Private Client insurers will guarantee the rebuild cost even if it is not enough.

3. Peace of mind that you are covered correctly. Call Property Wealth Insurance and See how we can help you insure correctly with better cover.

Under Insurance Issue

Mr Hall contacted Property Wealth Insurance Brokers to review his 5 bedroom, Grade 2 listed house & barn insurance insured via his bank.

Why? - Mr Hall assumed that his Index Linked home insurance cover of over 10 years provided adequate cover.

No time - Due to a busy lifestyle, Mr Hall had been unable to review his contents insurance including his valuables built up over a life time.

Following Our Review:

BUILDINGS
Original Cover £438k
Revised Cover £736k
Change Of Cover Move to a Listed Property Specialist
Increase needed 146%
Change to premium Only 5%

CONTENTS
Original Cover £50k
Revised Cover £133k
Change Of Cover Specific cover for Antiques and Contents covered Worldwide
Increase needed 166%
Change to premium Only 5%

What if Mr Hall had not reviewed his insurance with PWI?

Due to under insurance, his home insurer may only settle 60% of a claim or worse cancel his insurance completely In the event of a loss, would Mr Hall's insurers have the expertise to deal with a claim for a listed property?

With no specific protection for Antiques, Mr Hall's New-for-Old Contents Insurance would not have correct cover to meet his expectations, yet they may charge higher premiums.

Better cover from less insurance policies

Mr Day was recommended to Property Wealth Insurance by his Car broker as he was looking to purchase a new Ferrari within a few days of making contact but Mr Day also had identified that he had 3 other cars, his home insurance, Travel insurance, second home and a holiday home all covered with different insurers with different renewal dates.

How did PWI assist?

After the initial telephone conversation Mr Day received a competitive quotation from us for the Ferrari he was purchasing but we were also able to provide an indication quotation with the same insurer to cover the rest of his vehicles, his Buildings and Contents Insurance, annual travel and his second home all under one policy and were able to agree to sweep up each element as and when they came up for renewal on a pro rata basis saving the client having to pay cancellation fees and providing all for all of their domestic insurance needs with one policy under one renewal date.

How did Mr Day Benefit?

• 7 policies reduced to 1 with just 1 renewal date
• A saving on the cost of their insurance having all of the policies with one company
• 1 Single point of contact
• The cars benefited from better cover with Agreed value, Any Driver, Breakdown
• The Home and Travel cover provided Global cover for all of their contents, no warranties on their security and higher financial limits with market leading insurer
• Free Professional Buildings and Contents valuation
• 1 easy meeting each year rather than having to speak to an insurer every 2 months about different policies paying too many administration fees and saving time

The Olive Tree

A recent client was recommended to us as they had purchased a 700 year old Olive tree which was featured at the 2015 Chelsea Flower Show worth approximately £18,000.

The client’s current insurer would only cover garden plants and shrubs up to £5,000 and at the same time, the client was having £2.7m of works conducted at their property at the same that the Olive tree was arriving.

How Did PWI Assist?

At PWI we have a range of insurers covering many unusual items that are precious to our clients. We were able to arrange insurance for the client to cover the Contract Works value as well as the existing structure for the duration of the works at their home and cover or clients prized Olive Tree should a loss occur.

Beware of guessing your sums insured

Upon discussing a a client’s rebuild sums insured for a Grade II listed Property with 3 storeys, an outhouse, Annex and outbuildings the client had requested a sum insured of £468,791. Adter questioning this, the client asked us to update it to £700,000. How did we help?

After providing an indicative quotation for buildings insurance, we agreed with the prospective insurer to fund a professional Rebuild Survey in order to ascertain the correct level of cover for the client through an independent appraisal service which would normally have cost the client in excess of £500.00

The Appraisal recommended a Rebuild Sum insured of £1,078,100 which client thought was a little high but the client had never had it explained to them the methodology and implications of rebuilding a Grade II listed house versus a simple rebuild of a typical non-listed house.

Valuation was based on a total demolition of the site including garden, garden walls, out buildings, site clearance, surveyors and architect fees, Grade II listings approvals and also 20% on top of all of that.

The Appraisal stated that a complete destruction of the whole site was so rare as to be a miniscule risk of being totally demolished ‐ and therefore the 20% VAT on repairs would apply versus a ‘new-build’ which excludes VAT.

The client accepted the rebuild and the insurer also applied an Unlimited rebuild cost guarantee to the policy as the client had received a RICS approved valuation.

If PWI had not provided the advice…

Had the client suffered a total loss claim with a standard Perils based home insurer, it is likely that their policy would have been voided due to misrepresentation of the risk and the client may not have had any payment made towards their claim.

Jewellery Insurance Issue

We were recommended by a reputable Jeweller to a young lady who had been given a Patek Phillipe watch from her grandmother which she had valued at £18,000. Miss Bellard lives at home with her parents and together they had a Home insurance for their buildings and contents and three separate policies covering similar items with a jewellery only insurer.

What did PWI suggest?

After an initial telephone conversation, we suggested that they may be paying too much for their jewellery insurance and offered to visit Miss Bellard and her parents to review their home insurance needs and jewellery covers.

Upon visiting the clients, we listened to them about what they wanted from their insurance and then together, conducted a contents inventory with the family which concluded that their General contents were almost 50% under insured meaning that they could have an issue with any claim if a loss were to occur with their current insurers. We also discussed with them that their current security arrangements may need reviewing with recommendations provided on measures they can take.

How did PWI help?

After the meeting, we conducted a full market appraisal of Miss Bellard familly’s insurance needs and provided a quotation which reduced the cost of their jewellery insurance by embedding them into a new Warranty Free Home insurance covering their Buildings, Contents, Collectibles and jewellery with an insurer who also agreed to contribute towards the cost of the security upgrades.