Auto insurance claims were cut in half during the blockade

Auto insurance claims were cut in half during the blockade

Britain filed nearly half of its usual auto insurance claims between April and June this year, as coronavirus blocking measures reduce commuting to work and storing cars in garages.

According to the British Insurers Association (ABI), drivers made 324,000 new claims on their auto insurance in the second quarter of this year. This is 48% less than the 678,000 claims registered in the past three months.

If the British wanted, they got a bigger number. Average claims value rose 27% to £ 4,600, the biggest growth on record for the quarter.

Part of the increase in the average claim value may be due to continued vehicle theft during closure. While road traffic at lock depth has decreased by 73% to levels not seen since 1955, vehicle crime remains unchanged.

Motorcycle insurance specialist Carol Nash found that as of March police had recorded 32,250 crimes, including vehicle theft and vehicle damage. This has only decreased by 10% since February, 14% below the very high levels seen in March 2019 and 8% below the March 2018 figures, despite the fact that traffic has halved.

Mark Cooper, Product Manager at Carole Nash, said: “We have seen a consistently high number of total theft claims, not only for vehicles during the blockade (cars, trailers and motorbikes), but also vehicle parts. “

While the UK gave up public transport and sought distraction and exercise during the blockade, claims for personal injury, especially for cyclists and pedestrians, rose to 20% instead of the usual 10%. find More Than insurance companies.

Auto theft and personal injury are some of the most expensive damage insurance. ABI has previously determined that the increase in repair costs following the closure of several garages also contributed to higher claims.

This means that while fewer claims were paid this spring compared to the first quarter of this year, payments fell less than claims. A total of £ 2.1 billion in auto insurance was paid out between April and June, according to ABI, a 5% decrease from January to March.

This lower claim fee reduces auto insurance costs. Full auto insurance is now averaging £ 460, a four-year low and a 3% decline year-to-date.

Laura Hughes, General Insurance Manager of ABI, said: “Lockdowns of course result in significantly fewer vehicles on the road, which is reflected in a reduction in the number of car claims. As the average car insurance cost is currently the lowest in four years, insurance companies are providing savings. them to their customers. “”

However, he said insurance costs remained high, limiting price cuts.

“There are still cost pressures, such as the increase in vehicle repair costs, due to the sophistication of cars and the rampant theft of vehicles,” he said.

The cost of personal injury has also continued to rise, and the government should implement surprise reforms in April as planned, he said. A change to cut the auto insurance industry’s annual spending on household claims, many of which are bogus, by £ 2 billion was delayed a year ago because of the pandemic.

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These are bills you don’t have to pay off quickly

A sudden, steep but highly anticipated recession means we are all desperate to raise money over and over again and whatever we do, we need to pay off that debt as quickly as possible to strengthen our finances for turbulent times ahead. .

For the most part, this is absolutely correct advice. But not always.

Those with serious debt problems should seek advice from charities such as StepChange, which can develop personal plans for amortization or debt relief.

But if you haven’t and managed to manage your bankroll with unexpected cash in Covid, or if the crisis has left you in annoying but largely manageable levels of debt, here are a few strategies you can use.

Repayments: credit cards and overdrafts

We’ve always known credit cards are an expensive way to borrow money, but now, with the new reverse overdraft fee rules that generate a typical interest rate of 40%, overdrafts in particular are very expensive, although they don’t always realize it.

You’re right to pay it off as quickly as possible, and of course that applies to business cards, thresholds, or payroll loans – the most expensive form of mass loan out there.

Although the “snowball” method of paying off the smallest debt for the first time is gaining popularity with its psychological surge, experts urge debtors to focus on paying off the most expensive debt first. This is likely your overdraft. Clean it up and consider canceling setup if possible. It’s not worth it.

With a 0% reduction on old credit card balance transfer transactions, the days back and forth between free credit transactions without ever being paid back are fast fading away.

Millions of people take vacations to pay off debts. What happens when you finish?
Start by putting the balances on all of your cards below half of the total available balance to reduce the impact on your credit score. Then pay it off quickly and firmly.

Maybe you’ll pay it off: mortgage and personal loans

Long-term loans with lower interest rates sometimes don’t even feel like debt, they just sit in our brains under a file called an “Account”, as if we need something constant in life that we can’t escape.

However, paying a few pounds a month on a mortgage or loan can significantly shorten the term and thus the amount of interest you end up paying. But there is a warning.

First, these products often have an early settlement fee (ERC). Mortgages, in particular, are often a burden if you pay more than 10 percent of the amount you owe over a certain period or in the first few years.

Car loans often impose similar fines depending on the type of funding you have arranged to finance. A fixed rate may be required to pay off car financing and may be covered if early settlement is possible.

Second, as soon as you return the money, they leave. So, if you find yourself in the midst of a corrosive economic pandemic, for example, and you need extra cash to filter you out, this is not a flexible product to return some money even if you are a model borrower. By now, you are probably already exercising your vacation options.

Set up an emergency fund of between three and six months for your usual living expenses before embarking on an overpayment journey.

Another question that arises is whether paying off long-term debt at a low interest rate is the best way to use your money. Horrible cash savings today, even with fixed rate offers that block your money for several years, may not be able to pay you back more interest than you saved on a loan.

On the other hand, investing money can outperform our current very low interest rates, especially with such a long investment horizon. Getting the advice of an independent financial advisor is certainly something, although some investment vehicles have ridiculous management fees given today’s volatile stock market.

Don’t pay: student loans

Around 130,000 UK-based alumni made additional voluntary payments worth £ 2,740 each in 2019/20. Another 10,600 returned for an average of £ 4,310 before going into debt.

But it might be a useless exercise.

Student loan companies have been accused of promoting unnecessary payments
Students, starting university this year and receiving full tuition fees and maintenance loans, could owe more than £ 61,500 on departure, Hargreaves Lansdowne estimates. To get it back in full, they will need a salary of £ 53,100 – provided they don’t take career leave or get a raise.

Coming back to the real world, the average annual payout is now under £ 1,000 a year – just £ 120 in the last decade.

Unsurprisingly, the Institute for Tax Research (IFS) found that only 17 percent of graduates will complete their loan in full.

“It’s very worrying to send your kids to college to run into tens of thousands of pounds in debt – and nobody likes the idea that most of it will pay off in their fifties,” said Sarah Coles, a personal finance analyst at Hargreaves. Lansdown.

“However, if we focus on official student loans, we might lose money – and ignore the really problematic commitments students accumulate along the way.

“Most graduates will only pay back their student loans after they are written off. However, many are so worried about taking on debt that they make additional payments.

“For some, this would be a sensible approach based on careful calculation, but for many there is a real risk that this additional payment will be a waste of money,” he warned.

“During their studies, they’ll borrow thousands of pounds which can be returned to bite off.”

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