Insurance rise pushes up the annual cost of motoring

The AA does a study every year on the total cost of owning and running a car in Ireland. The sums are more than a little scary when you include everything.

Most of us tend to think of insurance, petrol and tax in that order. Those are pricy to be sure, but there are a lot of other large numbers you have to add up if you want to see the complete cost.

The AA uses a holistic figure that includes those obvious things like fuel, insurance and servicing, but also factors in a whole range of other costs. These are things like depreciation and interest charges, and replacement of components, like tyres, over the car’s life.

The figure assumes a motorist who buys a new car and retains it for eight years at an average annual mileage of 16,000kms. All repairs, replacements and servicing are carried out as per manufacturer recommendations.

Depreciation is one of those of which people tend not to be aware. If you buy a new car for say €16,000, you need to factor in the extent to which it will drop in value. Typically it will fall to somewhere around 20 per cent of its original purchase price within eight years. The depressing, but inescapable mathematics, means that depreciation is costing you €1,600 a year in cash.

In fact, when you add together all of those scary numbers, it turns out that the total cost of ownership for a modest Band C car works out €11,934.40. You can have a look at the AA website,, and see how we worked it out.

Different people will have different figures depending on the car and mileage and other factors, but one advantage of tracking that normal figure for Band C every year is that you can see at a glance what has gone up and what has gone down.

It turns out that the overall cost has risen by about one per cent in the last year, but there are some subtleties in the detail. The cost of motor insurance increased overall by an average of 3.5 per cent, although this does not apply evenly to all Irish motorists with women seeing more severe increases than men.

The insurance changes are mainly down to the gender directive which has been fully in place since the start of the year. As you may have read in these pages, we predicted it would mean an improvement for men, but a hit for women, and it would result in an overall increase across the board. We forecast three per cent and that is about how it has worked out.

Because insurers are not allowed to notice what sex you are any more the landscape has changed a little. Whatever category that you fall into, you may well find that your insurance premium could be very different.

I cannot stress enough that this year more than ever you really should shop around. Plenty of people saw their insurance costs fall, including most AA customers. It may be tedious researching those websites and switchboards, but it could well be worth it this year.

On the bright side there was relief from a slight fall in fuel prices, at least relative to the disaster we had to put up with last year. Petrol costs fell from 162.9 cent per litre in July 2012 to 157.4 this year. That is quite a modest fall and fuel prices are still kept far too high by Irish taxes, but nevertheless it does knock a fair few bob off the cost of driving.

Motorists also had to contend with a sharp increase in car tax which was increased by nearly 30 per cent for Band C in last December’s budget. The cost of a driving licence also increased by a whopping 220 per cent as we move to the new credit card format. While this is a huge rise proportionately, it is still only €5.50 per year.

Servicing, repairs and replacements generally saw slight rises that were very slightly better than inflation at 0.4 per cent.

There is no doubt that staying mobile in Ireland is a very expensive business.


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