Van insurance has become significantly more expensive in the past year, with an increase of 15.5% for new business customers, according to the latest Consumer Intelligence Van Insurance Price Index.
Rising costs and regulations drive up van insurance prices
The average quoted cost for van insurance in the UK is now £1,129.
However, there is some good news: prices have dropped 3.3% in the past three months and are below the record high hit in September 2022.
A recent dip in prices, but the overall trend remains upward
Despite this recent dip in prices, the overall trend remains upward, driven by rising claims costs and new pricing regulations by the Financial Conduct Authority.
The cost of claims is increasing due to the impact of inflation on parts, labour, and replacement vehicles, as well as the increase in traffic on the roads after the pandemic lull.
In response, insurers are raising premiums to cover these costs, with overall market premiums up 30.8% year-on-year.
Older van drivers pay significantly less than their younger counterparts
The ban on “price walking” introduced by the FCA a year ago, which prevents insurers from quoting higher renewal prices to existing customers than new customers, has led to higher renewal prices for all van drivers.
However, older van drivers aged 50 and over are still paying significantly less than their younger counterparts, with an annual policy costing just £691 compared to a prohibitively high £3,153 for drivers under 25.
Business users paying higher premiums due to advanced vehicles and more time on the road
Average premiums have now increased 52.4% since April 2014 when Consumer Intelligence first started collecting data, with prices peaking in September 2022 and now sitting just 5% below the all-time high.
Business users are now paying slightly higher annual premiums than those who use their vehicles as a car substitute under ‘social, domestic, and pleasure’ policies, likely due to spending more time on the road and their vehicles being more technologically advanced.
Despite rising prices, van insurance remains a necessary expense for many drivers, particularly those who use their vans for business purposes. However, it is worth shopping around to find the best deal and considering ways to reduce the cost of premiums, such as increasing the voluntary excess, improving security measures, and building a no-claims bonus.
Conclusion
Van insurance prices have increased significantly in the past year due to rising claims costs and new pricing regulations by the FCA, but there are some signs of improvement with a recent drop in prices.
Older drivers are paying significantly less than younger drivers, and it is important for all drivers to shop around for the best deal and consider ways to reduce their premiums.