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Insurance

Cost of motoring falls according to new report

Cost of motoring falls according to new report
Daragh Cassidy

Daragh Cassidy

Head Writer

Falls in the price of fuel as well as car insurance have led to a drop in the cost of motoring.

The average cost of running a family car has fallen according to the latest calculations from the AA. 

It now costs an average of €10,386 to run a family car for one year, down €207.26, or just under 2%, on the same figure for last year. 

The AA calculates the annual cost of motoring each year by taking into account common costs such as fuel, insurance, and servicing charges but also a wide range of other costs over the car's life like depreciation and interest charges, and replacement costs for components such as tyres. 

The figure assumes a motorist buys a new car and retains it for eight years at an average annual mileage of 16,000 kms.

The main reasons for the drop in motoring costs this year were falls in the price of fuel as well as motor insurance.  

Fuel 

Energy prices have fallen hugely in recent months due to a slowdown in the world economy as a result of the Covid pandemic. In fact at one stage in April the price of a barrel of oil even turned negative. This thankfully has led to lower prices at the pump for both petrol and diesel. 

The average cost of a litre of petrol fell from 139.5 cent in July 2019 to 125.9 cent this month while diesel fell from 129.9 cent to 117.3 cent. 

Car insurance 

Another area where costs have also fallen is, perhaps surprisingly, car insurance. 

The cost of car insurance has increased hugely in recent years, much to the consternation of motorists, who claim that Rip-Off Republic is alive and well. However the insurance industry has responded by saying the increase in premiums is due to more claims, in particular personal injury claims 

Regardless of what’s to blame, car insurance has thankfully been falling in recent months and according to the CSO fell by 7.6% between June 2019 and June 2020. 

However costs are not down across the board with some drivers still facing higher costs. 

“The fuel drop is a real saving for all motorists”, says Conor Faughnan, Director of Consumer Affairs at the AA. “Insurance is different; the average has dropped but there are plenty of motorists whose particular price has not. Groups like returning emigrants, those with claims or other non-standard risks may not have seen any improvement and across the board the cost is still too high.

“While the noticeable drop in driving costs is a welcome development for motorists, we cannot expect fuel prices, the drop which has been central to the overall drop in motoring costs, to stay as low as they currently are forever.”

Other motoring costs such as oil, tyres, servicing and repairs, and garage parking didn't change significantly year on year according to the AA.

Shop around

While the decrease in the cost of car insurance is a welcome change, if you’re reading this and are one of the motorists whose premium has increased, who may be wondering why. 

Well, if you bought a car with a bigger engine recently then this might have affected the price of your premium, as cars with bigger engines are seen as a greater risk by insurance companies, and for obvious reasons.

As well as things such as engine or car size, other factors that may influence the cost of your premium include over-valuing your car, moving to an area that's considered less safe, or having penalty points on your licence.

But what if your circumstances haven’t changed?

If your premium was driven up and your personal circumstances did not change, then the most important thing to remember is to be vigilant and shop around - we can’t stress that enough.

As we’ve seen time and time again, loyalty doesn’t pay, so consumers shouldn’t rely on getting a reduction in their premium based on how long they’ve been with a particular insurer or just because they haven’t made a claim.

Usually the only way to get a reduction in your premium from year to year is by researching the latest deals on the market and choosing the best one.

To help with this, back in November the Central Bank introduced a number of rules to combat the growing cost of car insurance in Ireland. For example, renewal notices must now be issued 20 days before a policy is due to expire and they must now include a quote for all cover options. See here for more info on the changes.

Get in touch

What do you think about today's report? Do you feel that the cost of motoring, in particular car insurance, is falling?

We'd love to hear what you think! Get in touch by leaving us a message in the comments section below.

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