Has car insurance gone up?

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The cost of car insurance has increased by 58% over the past 12 months. The average cost of a comprehensive car insurance policy is now £995 - an increase of £366 over last year. That's according to our car insurance price index, powered by WTW.

But why have these costs gone up, and who's been hit hardest? Let's take a look.

The Confused.com car insurance price index - powered by WTW - analyses more than 6 million anonymous car insurance quotes every quarter to find out how car insurance prices are changing. The prices used to calculate the index are based on an average of the best 5 quotes on Confused.com. All prices listed here are taken from this index.

We also conducted a nationally-representative survey of 2,000 UK drivers with car insurance policies via One Poll. This was to look at the public's sentiment towards the changing prices and whether they saw any savings by switching insurers. We did this survey between 2 and 5 January 2024.

Yes, car insurance costs have gone up recently. During the fourth quarter of 2023 (October-December), drivers paid 58% (£366) more than a year ago. This is the eighth annual price rise in almost 2 years.

Our research also shows a quarterly increase in the cost of car insurance. Prices are £71 (8%) higher in this quarter than they were in the previous 3 months.

There are several reasons why car insurance prices have gone up so much recently.

First, there are more cars on the road than there were before the pandemic. And more cars mean more accidents, and more accidents mean more claims. This all adds to the costs that insurers pay. 

The cost of parts and labour have increased due to inflation, this means it's costing insurers more to pay to repair or replace vehicles. It's also more complicated to repair cars now, as many of them use expensive technology and equipment.

The average cost of a car insurance policy in the UK is £995.

But it's still worth shopping around. Of the people who renewed their policy in the last 3 months, 3 in 4 (75%)saw their premium rise by over £87 on average. 

But those same drivers were able to save around £96, on average, by using a price comparison site

So even if your renewal isn't as high as you thought it might be, or is only slightly less than the previous year, you could still save money.

Compare car insurance quotes

Car insurance costs started to rise during 2019. But then the nationwide shift in driving habits during the pandemic helped to keep prices in check. The return to normality, coupled with the cost of living crisis, has seen car insurance costs rise again.

Period Average car insurance cost
Q4 2020
£575
Q4 2021
£529
Q4 2022
£629
Q4 2023
£995
 

Car insurance prices have risen across the UK. But some areas have fared worse than others.

Drivers in Inner London, for example, paid £1,607 for their car insurance - a £599 (59%) increase on last year. Outside of London, drivers in Manchester and Merseyside paid £443 (56%) more than last year. They're now paying £1,233 for their car insurance, on average.

Male drivers pay more than women

Male drivers saw their prices rise more than women. Their car insurance costs were £389 (59%) more than last year. They're now paying £1,607 on average.

Female drivers saw a smaller increase of £483 (60%) compared to last year. They're currently still paying less than men for their insurance, at £1,291, on average.

The EU Gender Directive means insurers can't work out insurance prices based on whether a driver identifies as male or female. But there are other risk factors that mean men could have higher car insurance costs.

For example, male drivers tend to drive more expensive cars. This usually makes for higher-value claims in the event of an accident. Male drivers also tend to have more motoring convictions than female drivers.

This could explain the £177 gap in car insurance costs between men and women.

Younger drivers hardest hit

It's widely known that young drivers tend to have much higher insurance costs than older, experienced drivers.

Drivers aged 18, for example, paid £3,162 for their policy, on average - more than triple the national average. It's also £1,447 (84%) more than a year ago. This is the most expensive age for car insurance.

When will the cost of car insurance go down?

You might think that your car insurance costs plummet once you hit 25 years of age. This isn't always the case. In fact, in recent years, the reality is drifting further away from this idea.

According to our research, car insurance costs tend to dip below the £1,000 mark once drivers reach the age of 43. Previously, it was at 39 when drivers would see prices below £1,000.

But if you're a younger driver, you don't need to wait around for your car insurance costs to go down. Here's how you can cut the cost your car insurance:

  • Shop around every year for a better car insurance deal
  • Pay annually for your insurance, if you can
  • Increase your voluntary excess
  • Build up a no-claims bonus

For more tips, take a look at our guide on how to get cheaper car insurance.

Other costs still high

Drivers will be pleased to know that fuel is one of the few costs that are coming down. According to our fuel price index, fuel prices rose between August 2021 and July 2022 before starting to come down again. Petrol now costs £1.41 per litre, and diesel costs £1.49, on average (prices correct as of  10 January 2024).

What our motor insurance expert says

“With prices up on average £148 (19%) in just 3 months, and £338 (58%) in 12 months, drivers are likely to be paying more than ever. So those who haven’t yet been affected should be wary of how pricing may affect them at their next renewal.

“But there are deals around and drivers can still save money, even if they’ve noticed their renewal has gone up. So if you’re due to renew, consider ways in which you can keep costs down. Whether it’s reducing your mileage or improving your car security, these can certainly help. But remember to always be truthful to your insurer, otherwise you risk invalidating your policy."

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