Car insurance prices start to creep up for UK drivers, new data reveals

• However, prices are still cheaper compared to 12 months ago, meaning those shopping around can still save money on their insurance.
• Why are prices starting to increase? Confused.com customer data shows that the average cost of claims⁽¹⁾ has increased by 42% since 2020, suggesting UK insurers are having to pay out more each year.
• Almost half (49%) UK drivers have seen their renewal increase in the past 3 months, but some saved £82 by shopping and switching⁽²⁾.
• Confused.com car insurance expert, Matt Crole-Rees, offers drivers tips to save on their insurance and soften the blow of potential increases.

UK drivers are now paying £719 for their car insurance - an £8 increase compared to 3 months ago

Drivers across the UK could soon see their car insurance cost start to increase, as new data shows prices have started to rise in recent months.

The average cost of car insurance in the UK is now £719, which is £8 (1%) more expensive than just 3 months ago. This is the first time prices have increased since the end of 2023.

That's according to the latest car insurance price index by Confused.com, powered by WTW. Based on more than 6 million quotes, it's the most comprehensive car insurance price index for new premiums in the UK.

However, for now, most drivers will still see a lower price when shopping around for their car insurance, as prices have dropped by £38 (-5%) in the past 12 months, on average. While this may come as good news, this drop in prices is significantly smaller than reported decreases in the past couple of years. In fact, in comparison, 12 months ago prices were 14% lower than the previous year.

This suggests that while insurers are still lowering prices for most drivers, this trend is starting to stall. And when taking into consideration the increases in recent months, drivers could soon be facing higher premiums when it comes to their renewal.

According to the Confused.com car insurance price index, car insurance prices have been consistently decreasing each quarter since the start of 2023. This followed a period of steep increases as insurers adjusted their pricing to reflect the economic fallout of COVID. But what is causing prices to increase now?

Further data from Confused.com finds that the cost of claims made by customers - a key consideration when it comes to how much drivers will pay - has in fact been increasing in recent years. And this could be causing insurers to adjust their prices to reflect the risk of having to pay out more.

According to the data, the average price per paid-out claim has risen by 42% between 2020 and 2025 - from £3,842 to £5,464⁽²⁾. Despite this, the number of claims being made over the same period has in fact dropped by 59%. This suggests that while fewer incidents are being reported, when they are, they're considerably more expensive to rectify.

Change in average claim costs between 2020 and 2025

Across all claim types, the average price per claim has increased significantly. And this could largely be down to the fact that cars today are considerably more expensive to repair or replace. In cases where repairs are needed, it's not just the cost of the parts that is taken into consideration. Labour costs can be a lot more now than they have previously been - especially where newer cars are involved. This is because a lot of newer cars are equipped with technology that may need recalibrating after a repair, which increases the overall cost. Equally, if a car is written off or stolen, the cost to replace that car could be considerably more. And as these costs continue to rise for insurers, it's likely they will be reflected in car insurance premiums as a result.

However, if drivers are still seeing a lower price at their renewal, they shouldn't stop shopping around, as further research shows that savings can still be made. A survey of 2,000 UK drivers⁽¹⁾ found that almost half (49%) of those who received their renewal in the past 3 months saw a more expensive price compared to the previous year, of around £70 on average. However, of these, almost half (46%) went on to shop around and switch insurers, saving £82, on average.

Equally, more than 1 in 5 (22%) actually received a cheaper renewal, on average. But almost 1 in 5 (17%) still decided to shop and switch, saving £79, on average. This proves that even when car insurance prices are increasing, savings could still be made.

But for now, drivers are still mostly seeing a drop in prices when they shop around, as the price increases are only a reflection of trends in recent months. And some drivers are seeing even greater savings than others.

Young drivers in particular are saving upwards of £200 pounds on their car insurance, on average. 17-year-olds are now paying £356 (-17%) less compared to 12 months ago, with the average premium now £1,695. Similarly, 18-year-olds are now paying £287 (-12%) less year-on-year, at £2,042, on average. The only age group likely to see an increase compared to last year's price is 71+, as premiums have risen by £2, or 1%.

However, when looking at recent trends, prices have increased for most age groups in the past 3 months. The most significant change is for 51-year-old drivers, as prices have increased by £36, or 6%, in the past 3 months. 50-year-olds are also seeing a significant shift over the same period, of £29, or 5%. In comparison, younger drivers are still seeing decreases in recent months, as much as £73, or 5%.

It's a similar picture in different regions of the UK, where almost all are seeing price savings year-on-year, with the exception of Northern Ireland and Scotland. Prices in Northern Ireland have in fact increased by £168 (20%) in the past 12 months, to £1,020, on average. And in Scotland, prices are now around 1-2% more expensive year-on-year.

Meanwhile, Manchester and Merseyside are still seeing savings of 10% year-on-year. This equates to £89 saved, putting the average premium in the region at £807. Similarly, in Inner London, drivers are now paying £97 (8%) less than 12 months ago, at £1,088.

More recently, all UK regions have seen an increase in prices, except for inner London, where prices actually dropped very slightly, by £5, on average. Northern Ireland has seen the biggest increase, of 8%, or £73. This is followed by South Wales, where prices have increased by £23, or 4%, in the last 3 months.

If prices continue to increase, then it's likely drivers will be paying more for their insurance than they have done before. That's as prices today are 38% more expensive compared to 5 years ago, on average.

In fact, almost half (46%) of drivers claim they've had to make a financial sacrifice, such as using savings or cutting back on personal spending, to pay for their car insurance. And 1 in 5 (21%) consider car insurance to be one of their biggest household outgoings.

It's clear that shopping around is the key to saving money on car insurance. Although, worryingly, many drivers could be missing out on even better savings. According to the research, drivers typically shop around 19 days before their renewal is due and hold off buying until 10 days before, on average.

But new data finds that running a quote 28 days before your renewal is due could be the key to getting the best price. Confused.com car insurance data shows that buying car insurance around 28 days before renewal could be 53% cheaper than buying on the renewal day⁽³⁾.

Shopping around early isn't the only way drivers could save money on their car insurance. Experts at Confused.com offer more tips to help drivers cut costs even further:

For more tips on how to save on car insurance, visit: www.confused.com/compare-car-insurance/tips-for-cheaper-car-insurance

- ENDS -

Notes to editors