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Why is my car insurance so high?

Your car insurance renewal quote has come through, and the price has gone up. But you’ve not claimed and your driving habits haven’t changed, so why are you being asked to pay more than last year?

Here's everything you need to know to understand why your car insurance is so high.

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Why has the price of my car insurance gone up? 

There are 2 main reasons why the cost of your car insurance has risen. The first is economic reasons and the second is risk factors. There isn’t much you can do about the former, but thankfully there’s a fair bit you can do to control the latter.


Economic reasons 

There are several economic factors that influence the price of car insurance:

  • Insurance Premium Tax (IPT): IPT is a tax that the government levies on all insurance policies, so there’s nothing you can do about it. Between 2015 to 2017, it rose from 6% to 12%. 
  • Serious injury compensation: When people make a claim for a serious injury or whiplash, insurers use something known as the Ogden rate to calculate payouts. This can go up and down and has a direct impact on the cost of your cover.
  • Uninsured drivers: If you’re hit by an uninsured driver, you might be able to claim for it through the Motor Insurance Bureau (MIB). This impacts on other drivers’ insurance costs, as the MIB recoups the money by raising the costs of law-abiding drivers. 

Risk factors 

Insurance is based on risk, so if an insurer thinks you’re high-risk, they’re likely to charge more. Some risk factors are obvious. If you get points on your licence you’re likely to see your insurance costs rise - but others like where you live or your occupation are less so. 

If you’re wondering why your car insurance has gone up, here are a few examples of the factors that could be affecting you: 


Car accidents

Even a minor prang could bump up the cost of your insurance. If an accident was your fault you might expect a significant hike to your insurance costs. But even if it wasn’t your fault the cost of your cover might still go up. 


Criminal convictions

If you have a criminal conviction, your costs could go up. This is because you’re seen as higher risk to insurers. If you’ve got an unspent criminal conviction, motoring-related or not, you should declare it to your insurer.

You might also need to declare spent convictions but only if you’re asked. Read our guide on motor insurance for convicted drivers for more information.


Points on your licence

Your insurance may go up if you’ve got points on your licence. Some points stay on your licence for years or more, depending on the severity. Make sure you declare any points on your licence and the reason for them to your insurer. If you don’t disclose them, your insurer might not pay out if you need to claim.


Car modifications

Thinking of souping up your motor? It could cost you more to insure. Whether you’re remapping your engine adding a new spoiler, it’s classed as a car modification. Even something as simple as a tow bar could add to your insurance costs. Car modifications could make cars more attractive to thieves, which increases their chance of being stolen.

Other modifications might increase the speed and power of the car, which puts you at more risk of being involved in an accident. What counts as a modification varies between insurers, as does the additional cost. Some insurers offer insurance specifically for modified vehicles, too, so it’s always worth shopping around and comparing car insurance quotes. 


Your occupation

Insurers have data attached to each type of occupation. So, different jobs might be higher risk, even if the job doesn’t involve driving. Don't try and fiddle your job title just for cheaper car insurance costs, though. If you’re caught, your insurer might not pay out if you need to claim.

You may also find you won't be able to get cover in the future. Honesty is the best policy - select a job title that most accurately reflects what you do. For more information, check out our guide on job titles and car insurance.


Your car’s value

You usually pay higher insurance for your car if it’s more valuable, as the parts are likely to be more expensive to repair or replace. Pricier cars are also more likely to be stolen.

Read our tips on how to get cheaper car insurance for more ways to save.


Am I paying a car insurance loyalty penalty?

If your car insurance has gone up for no reason you may wonder if you're being charged a loyalty penalty for not switching.

Previously, insurance companies have been known to increase prices on renewal to subsidise bargain rates for new customers. This practice, which is known as ‘price walking’, has now been banned by the Financial Conduct Authority (FCA).

It should mean that every driver pays based on the risk they present. Those renewing may see less of an increase as a result, but rates for new customers might not be so competitive.

Still, even if you find your renewal quote isn’t too bad, you’re still likely to save money by comparing car insurance quotes.

Compare car insurance quotes


Why is my car insurance so high?

If your car insurance has jumped up over the last year, this is usually to be because you represent a greater risk to the insurance company.

This could be down to any number of factors including:

  • Your age - younger, inexperienced drivers are more likely to be in an accident.
  • Where you live - crime rates in your area could impact on your car insurance costs.
  • Your driving history - if you’ve made previous claims or been in several accidents you’re likely to pay more.
  • The car you drive - pricier cars cost more to insure.

Why is car insurance so high for younger drivers?

Car insurance for young drivers is usually so high because insurers take into account the likelihood of needing to claim.

Younger drivers are generally less experienced behind the wheel than older drivers. This means they have a higher claim risk.

The average cost of car insurance for an 18 year old is £1,453*.

If you want to make your car insurance cheaper, you could consider asking a more experienced driver to add you as a named driver to their policy. But make sure you're not committing fronting.


Are there any other reasons why the cost of car insurance is so high in 2022?

There are a number of reasons conspiring to keep car insurance costs high:

  • A cut to the Ogden rate, which determines compensation payments, from 2.5% to 0.25% has increased payouts for victims, but also increased car insurance costs as a result.
  • Claims are becoming more expensive with a rise in keyless car crime.
  • Uninsured drivers - according to the Motor Insurance Bureau they add £30 to every car insurance cost.

How do I cut my car insurance costs?

Although you can’t control many of the factors that might be keeping your car insurance costs so high, that doesn’t necessarily mean you can’t cut your bill.

To keep your costs down, try the following:

  • Shop around: compare car insurance quotes to find the best value cover- this is the best way to cut costs.
  • Don’t auto-renew: when your policy is up for renewal, don’t assume your quote is the best you can get. Shop around each year.
  • Don’t overestimate your mileage: the larger your estimated mileage, the more you might pay.
  • Increase your excess: by agreeing to pay more towards the cost of a claim you could reduce your car insurance costs. Just make sure your car insurance excess remains affordable.
  • Think about a black box policy: Younger and less experienced drivers could save a lot by agreeing to having a black box device fitted to their car that monitors your driving. The safer you're driving, the less you pay.

*Based on Confused.com Q2 2022 price index data.