[Nick]

The Association of British Insurers (ABI) recently released data from the first quarter of 2026 and reported that the average cost of car insurance in the UK is around £560 per year.

Whilst this is great news for our wallets, the ABI did also highlight that the cost of repairs is increasing, especially "high-tech" repairs, which could see an increase of around 8%, which does keep costs from falling even further. This reflects the increase in car tech such as sensors, cameras, and other advanced technology many cars today are fitted with.

Have you noticed your renewal quotes flattening out this year, if you've had one through yet?

Source: ABI.org.uk

[Beelzebub]

Yes, by about 30%

[Rolebama]

If I remember correctly, my first Policy covered me for £2,000,000 worth of third party liability. My current Policy covers me for £40,000,000 worth of third party liability. Each increase in cover, over the years, led to increases in premiums. These increases were caused by individual incidents where the insurers work on the probability of increased costs of payouts when the next incident occurs. I don't think they look at car on car collisions, but clowns in Land Rovers driving off motorways onto railway tracks, and cement mixer lorries also driving off motorways onto railway tracks. (My memory says that the land Rover damaged the tracks which disrupted trains whilst it and debris were removed from the tracks, and the track was repaired. I seem to remember that the cement mixer incident involved collision with a passenger train, and numerous injuries. Hence costs involved in removing the cement mixer and the damaged carriages etc from the track, repairing the track and all damaged stock, as well as payouts to those injured.) I also have memories of a car-related incident causing a fire on a RoLo ferry, and a large car park fire at a major airport.
The last of these incidents was a few years ago, and I don't recall any particular incident for a reasonable time period, so I don't think there has had to have been a substantial increase in policy costs since. (I am also aware of a few footballers writing off their million pound McLarens and the like, but that seems to have died out now.)

[Drivingforfun]

Maybe @Nick or @Beelzebub or @TC1474 can answer this:

What happens if/when a claim exceeds the seemingly - but definitely not - infinite external liability amount?

Presumably a court will be involved with those kinds of numbers. If £50m of damage or compensation is ruled and your limit is £40m. Are you as the at-fault party left with £10m debt or does the insurance company just absorb it (perhaps leading to the escalating scenarios @Rolebama was referring to)

If the latter happens I guess it's a case of the insurance company themselves having to weigh up risk vs. guarantee, with the added complexity of having to compete on value for customers' business by not over-insuring...

[Beelzebub]

I may be wrong, but I don't believe an insurer can limit their third-party liability. That liability is imposed by sections 145(3(a)) of the Road Traffic Act 1988, which covers "any liability", without any mention of limit.

[TC1474]

In the case of personal injury, each injury is classified as minor moderate or severe/catastrophic and will have a lower and upper value for each category.

So for example in the case of a severe brain injury or quadriplegia, the maximum amount that can be awarded under the term "General Damages" (which is how an injury is defined) is around £300,000 which may not seem a lot for such a life changing injury.

At the other end of the scale, something like a broken tooth is valued at around £3,000

Where the real costs come into play is the other or second element of the claim which are called "Special damages"

Specials take into account things such as out of pocket expenses, damaged property, special needs, maybe future treatment and in serious cases loss of earnings and maybe lifelong care as well as taking into account things such as loss of promotions which would mean loss of a pay rise, pension entitlements, maybe having a specialist vehicle which would need to be adapted by Motability or the like, maybe their property needs to be adapted or altered, this is where the serious money comes in and can run into the millions of pounds in settlement.

In these situations matters will be dealt with usually by the High Court. There is a special hearing which is called a "Quantum hearing" (quantum is the legalise speak for value) and can be held once liability has been determined in the event the third party has failed to settle on causation and subsequent liability.

In these cases, the insurance companies are liable for the full amount regardless of any figure they state, although bear in mind the values they quote are usually in respect of legal costs, so even in the most catastrophic of cases the lower end of the legal expenses is usually covered with a standard policy.

So the courts have the final say and set the values.

As an example, a few years ago I dealt with a crash involving a potential young professional footballer who was on the books of a Premier League club. He was 17 at the time of being injured.

He suffered catastrophic brain injuries as a result of a crash 10 years previously (once proceedings are issued there is no statute of limitation) but settlement took a long time for a whole number of reasons based on professional advice on how far he could have gone in the game, what his potential earnings might have been including image rights, endorsements and so on.

Eventually, whilst his brain injury settled for £280,000 (which was the maximum at the time), the special damages settled at around £12 million.

Third party insurers got hit for the full amount allowing for the fact that they had also paid out interim payments in the preceding years, and legal costs came in at around £1.2million which included lawyers on both sides, counsel and experts involved such as myself.

In damage only claims values are usually much lower and are in the main these days handled by claims management firms, so the value of insurance LEI costs are not normally under scrutiny.

So to recap, a limit cannot be set on personal injury valuations, but can be set on legal costs, which as I said are very rarely exceeded even in the most catastrophic of cases.

Hope this helps?

[Nick]

Also worth pointing out @Drivingforfun that insurers will have re-insurance that covers them against those huge payouts. For example in the Selby train crash, I believe the driver was insured with Fortis - there was a projected £50m payout (I think the last I recall about this case was they paid out around £30m - good chance it's gone up since) - I think Fortis were expected to pay the first £1.5m (I guess like an excess) whilst the reinsurers covered the rest.

[Drivingforfun]

Thank you for those explanations, very interesting 👍

I seem to remember once seeing a list of values for injuries on a policy document and being surprised at how little the loss of an eye was "worth" – it was in line with other injuries that I wouldn't consider life-changing. I assume that was referring to general damages and is where the special damages would come in.

[TC1474]

@Drivingforfun

If you read what I wrote in my previous post, General damages refer to the value of each individual injury and are categorised as minor. moderate, severe and catastrophic at the top end.

Values are set by the Judicial College Guidelines (Judicial Studies Review Board) and are reviewed most years, the most recent edition was released on the 9th of April this year with an average 8.26% uplift on most injury categories.

General damages only apply to the injuries sustained.

Special damages always form part of any injury claim as they extras as I mentioned so it covers loss of earnings, damage to property such as clothing, vehicles, watches, equipment, (anything that has been lost or damaged as a result of the crash) loss of pension rights, loss of amenity, out of pocket expenses, any special equipment and/or adaptions that are required, maybe long term care costs (often applies in the case of severe brain injury cases) and the list goes on.

I had one chap who used to fly to the Philippine's twice a year but could not sit in cattle class comfortably because of his leg injury. Special damages covered the cost of 2 return business class flights a year for a 20 year period and allowed for inflation and subsequent cost increase for those tickets, so it can cover a lot.

The other point to make is that the claimant is allowed also to make claim for pain and suffering, the exception being if the person involved was unconscious for any substantial period of time or was placed into an induced coma as it is deemed that there is no pain and suffering if you are unconscious.

I hope this clarifies things for you?

[Santa]

Originally Posted by Rolebama

(I am also aware of a few footballers writing off their million pound McLarens and the like, but that seems to have died out now.)

I don't know, but I suspect that people who own very expensive cars probably insure them through a broker directly with Llloyds.

When I worked for the NHS, we insured the part of our fleet that needed insurance in this way.

[Nick]

Yeah their are quite a lot of specialist insurers nowadays that pick up high net worth, and high risk clients. when I first got into insurance I worked for Privilege Insurance, a tart up really at the time, and they were building their business by covering some of these sort of risks - young people with ridiculously expensive cars. Back then there were a lot of young entrepreneurs entering the internet world, earning tons of cash and buying crazy cars. We took on quite a few of those.

[Rolebama]

I believe the AA did self-insurance with money at the bank. It wouldn't surprise me if the NHS did something similar as I can't see Govt giving money away if there is some way to hold onto it.

[Beelzebub]

Originally Posted by Rolebama

I believe the AA did self-insurance with money at the bank. It wouldn't surprise me if the NHS did something similar as I can't see Govt giving money away if there is some way to hold onto it.

AIUI the ability to self-insure was removed in 2019 following a consultation. One of the reasons given by the government was that the £500,000 bond was inadequate, and in any event few companies took up the option.

I suspect the approach taken by my old employer is more common, i.e. insure but keep the premiums down by having a very high excess (£10,000 forty years ago, say £40k today).

[Rolebama]

@Beelzebub I used to argue that my voluntary excess would equal the value of my car. Some companies accepted it, others didn't. My basic argument was that I had no intention of claiming off them as I had no intention of damaging my own car, and if someone else did, it was their problem. Over almost 60yrs driving I have had only one successful claim against me which was for £12.50 in 1976 for the recovery of someone else's car after I hit it because of another car colliding with me knocking me off course. I never understood why the claim was against me, but it was agreed it would not affect my premium, so I did not pursue the matter.