Job Losses Can Lead to Higher Car Insurance Premiums
The credit crunch has continued to bite deeper and deeper into the pockets of Britons, around the country. However recent statistics have indicated that it is continuing to bite even deeper and wider.
The Office of National Statistics has stated that 225,000 people became victims of redundancy at the end of 2008 - bringing total unemployment in the UK to a staggering 1.92 million; while analysts believe that unemployment will reach 3 million in 2009.
Research that was recently conducted by an insurance website, found that for those who lose their jobs, the lack of a monthly payment makes them appear as a higher risk to their insurance providers. Car insurance providers have been found to be raising the premiums that the policy holder has to pay. So such people have not only become redundant, but their car insurance providers also increase the premiums that they need to fork out.
Car premiums rising with risk
Car insurance providers see such situations as a change in employment status, which have been said to make insurance premiums increase dramatically. Changing occupational status to 'unemployed' on an insurance policy, can bump up the price of insurance by an average of £137.77 or 20 per cent.
The insurance website, calculates that these premium hikes are set to cost the latest victims of redundancy a total of £16.4 million extra for car insurance in the next year alone. With unemployment figures set to grow by 1,644 per day this year, more and more drivers could end up paying inflated insurance premiums in addition to the tragedy of losing their job.
Ashton Berkhauer, insurance expert at the insurance website, said: "The threat of redundancy will become a painful reality in the coming year for many UK workers, sending their finances into freefall. Adding insult to injury, the newly unemployed will find themselves having to fund a radical increase to their car insurance premiums of almost 20 per cent on average, even if they have maintained an impeccable driving record in the past.
He added: "With many providers' advertising campaigns promoting a 10 per cent reduction in various guises when renewing car insurance, any savings an unemployed driver would make would be completely wiped out.
Saving "wiped out" with rises in car premiums
Berkhauer concluded by saying: "For peace of mind, those motorists nervous about what the future may hold on the job front should contact their provider to discuss the potential impact on their premiums. It is advisable for all motorists to shop around when renewing their car insurance to ensure that they are getting the most competitive deal. Making savings in the short term could make all the difference as no one can be certain when that rainy day will arrive."
Premiums are dictated by the risk profile the driver has, and providers make the assumption that an unemployed driver will spend more time driving as they no longer have the routine of a regular commute, thus a higher risk is related to such a driver. Drivers do not have to inform their insurer in the event that they become unemployed until the point of renewal, however failure to do so could result in a motorist invalidating their car insurance policy.
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