The Association of British Insurers last week revealed that the average cost of a payout is at an all-time high. It now stands at £2,936 per claim.

To cover that, we’ve all noticed annual premiums going up. The average annual cost of motor insurance is now £481.

But why are the costs of claims going up so rapidly?

Technology

Every month it seems that there’s a new innovation in motoring. Even basic models now have all sorts of technology that is expensive to fix.

Wheras a relatively minor motoring incident previously just meant replacing lights or fixing and respraying panels, the list of what needs fixing now could be endless. Accidently back into a pole and you could knock out all the cameras and sensors that (technically) should have prevented the accident.

Personal injury

While the number of personal injury payouts is coming down, thanks to efforts to reduce bogus claims, the value payed out is going up. Personal injury claims now cost on average £10,816.

The ABI says that the Government needs to move more quickly to cap the amount paid out for minor injuries like whiplash. Last year, ministers vowed to cut payouts for these kind of injuries to £425. That would supposedly save insurers £1billion a year and should, in theory, see individual premiums fall by £40 each.

So, faced with rising insurance costs what should drivers do?

You won’t be surprised to hear that our top advice is to get a dash cam. While it can’t prevent an accident it can help to show what happened and protect you when it’s not your fault. Even if you are at fault, it might help reduce the payout if you can prove that it was a minor impact. While the penalties for making fake injury claims have got stricter they still go on. As do ‘crash for cash’ scams where a car driver causes you to hit them on purpose so they win a payout.

You don’t have to spend hundreds on a dashcam. 4Sight can be downloaded to your smartphone so all you have to do is place the phone in a car mount and open the app before you start the engine. It’ll even send footage to someone who can help if you have an accident, plus it’ll walk you through what to do afterwards to gather further evidence.

If you want to reduce your premium, there are a few tricks of the trade we can share with you too:

1. Never, ever allow your insurance to auto renew

According to GoCompare only 38% of us take the time to look at the cost for last year’s premium to compare. That’s crazy as there’s rarely a reward for loyalty. Always shop around and use comparison sites to get the best price. Then, go back to your insurer and see if they’ll match it. If not, move on.

2. Don’t leave it to the last minute

Start shopping as soon as you get the renewal letter. Driving without insurance is illegal, so if the insurers know you’ve left it late they know they can force a higher price. Give yourself plenty of time to secure the best deal.

3. Check the small print

Once you’ve found a deal that looks good make sure it includes everything you think you might need. Some policies include things like recovery and courtesy cars as standard while with others they’re add ons that quickly mount up.