Has car insurance gone up in 2025?

According to the latest car insurance price index by Confused.com, the average cost of car insurance in the UK is now £757. That's the lowest it's been in the UK in more than 2 years.

This marks a significant decrease of £144 (16%) compared to 12 months ago. 

Prices have been gradually falling since the beginning of 2024, with younger drivers in particular benefitting from a steep decrease in premiums.

Are car insurance costs falling?

The good news is that, at least as of late, they are! Car insurance premiums have been gradually falling since the beginning of 2024 after reaching a record of £995, on average, at the end of 2023. The average price of a new policy is now more than £140 cheaper compared to 12 months ago. 

A rise in UK inflation, among other factors, has driven car insurance premiums to record levels. But, with healthy competition between insurers and a stabilisation in claim costs, costs are beginning to decline. 

Why is my car insurance still expensive?

'If costs are falling, why am I still paying so much for car insurance?'

It's a good question, and there are some reasons behind this.

Although car insurance prices are dropping lately, some motorists are actually facing price increases at renewal. Almost half of UK drivers (49%) claim their renewal price has increased in the past 12 months. 

Those who faced higher renewal prices said they were asked to pay £79 more than last year, on average. Those who were offered a cheaper renewal price by their existing insurer said it was only £57 cheaper compared to the year before.

It pales in comparison when you consider drivers could save £144 when they shop around. That's why it's so important to compare quotes, even if your renewal quote is cheaper than the year before.

Insurance companies consider a mix of personal and external factors when deciding how much you pay. Even if average car insurance costs are down, your personal situation or wider trends might still drive your price up.

So, what do these factors look like?

Personal reasons

Premiums may be falling overall, but your personal circumstances still have a bearing on the prices you're quoted. Here are some factors that might affect your premium:

Previous claims: If you claim on your insurance, even if it wasn’t your fault, it can lead to higher premiums when your policy is up for renewal.

Change in job title: Your occupation can have a bearing on your car insurance cost. Some jobs are seen as riskier than others, especially if you commute to work by driving your car.

Different car groups: Upgraded your wheels? Cars in higher insurance groups tend to be pricier to cover.

Other external reasons

There are other external reasons out of your control that can cause car insurance prices to rise across the board. These include:

Inflation: The rise of inflation in the UK has seen the cost of parts and labour soar. In turn, it costs insurers more to pay to repair or replace vehicles. As newer cars adopt advanced technology and equipment, it's more complicated to repair and replace certain components.

Car thefts: A rise in car thefts can lead to higher premiums for everyone, even if you’ve never been affected.

How have car insurance prices changed over the past few years?

Fewer drivers took to the road during the Covid-19 pandemic. But prices rose significantly as more people got behind the wheel when restrictions were lifted. This coincided with the cost of living crisis, so costs began to soar in 2022 and 2023.

Prices continued to climb during this time, and the average cost of car insurance in the UK reached a record of £995 in Q4 of 2023. Since that point, costs have continually declined.

 

Male drivers pay more than women

While car insurance costs continue to fall for all drivers regardless of gender, men generally pay more. Male drivers pay £813, on average. This is down 15% (£145) compared to 12 months ago. Whereas women pay £663, on average. This has dropped by 18% (£143) compared to 12 months ago.

The EU Gender Directive means insurers can't set prices based on gender. But, on average, men pay more due to other risk factors that come into play. Generally speaking, men often drive more expensive cars, which leads to higher claims. They also tend to have more motoring convictions.

These factors contribute to a £150 gender gap in car insurance costs between men and women, on average. 

Respite for younger drivers

Despite paying significantly more for car insurance than other age groups, young drivers are benefitting from the greatest savings.

According to the latest car insurance price index by Confused.com, 18-year-olds now pay £697 (23%) less compared to 12 months ago. This means drivers of this age are now paying £2,329, on average. This is the lowest prices have been for drivers of this age in almost 2 years.

17-year-olds are also benefitting from significant savings, with prices now £775 (27%) cheaper than last year. This means drivers of this age are now paying £2,051, on average. For context, it’s the biggest yearly drop for this age group in more than a decade.

Why are prices falling for young drivers in particular? On a broader level, fewer claims mean fewer pay outs, that means insurers can adjust their premiums accordingly. Also, newer cars are adopting more safety technology, which means they're less likely to be involved in accidents or at a lower risk of theft.

A key reason for these savings is a shift in the number of young drivers opting for telematics policies. Relative inexperience on the road counts against the 17-20 age group when it comes to car insurance prices. But telematics policies can help combat sky-high costs.

How? These devices track a driver’s habits and driving patterns to calculate a more accurate price. In short, safer driving brings down the cost of car insurance.

Other costs still high

Despite falling car insurance premiums, the overall cost of running a car isn't always cheap.

In general, the cost of repairs and parts is increasing as vehicles become more technologically advanced. The more it costs to manufacture specialist parts, the greater the cost is to motorists.

However, the cost of fuel has gradually fallen. In fact, petrol prices are at their lowest level in nearly 4 years.

If you want to find the cheapest petrol or diesel prices near you, you can use our fuel price tool.

Petrol now costs £1.33 per litre, and diesel costs £1.39, on average (prices correct as of 19 June 2025).

Getting cheaper car insurance

If you're looking for tips for cheaper car insurance, here are some ways that may help bring the cost down:

Pay annually: Paying for your policy in one go rather than monthly can often work out cheaper. This is because you'll avoid paying interest over monthly instalments. 

Black box policy: A telematics policy could lower your costs, especially if you’re a careful driver. Young drivers might benefit from this type of insurance.

Look at the cover type: Check whether the level of cover you’ve chosen suits your needs. Sometimes, comprehensive cover can be better value than third-party only.

Shop around: Using price comparison websites like Confused.com before your renewal can help ensure you get the best deal possible.

Increase your voluntary excess and build up a no-claims bonus: Increasing your voluntary excess means you're willing to contribute more money in the event of a claim. You build up your no-claims bonus each year you drive without claiming on your insurance policy.

What our motor insurance expert says

“Car insurance prices have been dropping for some time now - and this is great news for those who are due to renew soon. Our latest data shows that the cost of a new policy, on average, is £144 cheaper compared to last year. But some customers aren’t seeing the same savings in their renewal price from their insurer.

“When it comes to your renewal, your premium price might go down - or it might stay about the same. But as average prices drop, insurers can become more competitive, which means you could get a cheaper price elsewhere. It’s important not to just stick with a price because it looks good - you could be missing out on a lot of money.

“To get an idea of how much you could be paying, we’ve created a car insurance calculator, based on your age, gender, and where you live. Though it shouldn’t be taken as a final price, shopping around is the only way to see the cheapest options for you. Doing this around 3 weeks before your renewal is due could be the best time to get the lowest price.

“And don’t forget to review your details. Ensuring your mileage is accurate, or enhancing your vehicle’s security could also save you money on your insurance. And if you have the option to share the driving, adding a named driver can offer some savings too.

“Be savvy and prepared when it comes to your car insurance - it’s the best way to make sure you’re getting the best price at a time when any money back in your pocket is no doubt welcomed!”

Rhydian Jones Commercial Director & Motoring Expert

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