New years savings: car insurance prices drop by £111 on average - while other motoring costs set to rise in 2026

• Car insurance savings come ahead of expected price hikes this year across other areas of motoring, including fuel tax and increased VED taxes.
• Some drivers will see even greater savings when shopping around, with 17-year-olds now paying £635 (-25%) less compared to 12 months ago.
• Similarly, drivers in Manchester & Merseyside are now saving £178 (-18%) compared to this time last year.
• While drivers shopping around save upwards of £100, on average, more than 2 in 5 (42%) UK drivers who received their renewal between September and November last year, saw their renewal price increase
• Millions of motorists miss out on savings and shop around outside of the car insurance ‘sweet spot’, which could save 53%¹ - and other tips on how to save money.

Drivers are being urged to cash in on car insurance savings, ahead of an expected rise in other motoring costs later this year.

The average cost of UK car insurance has fallen by £111 (-13%) in 12 months, to now sit at £726. That’s according to the latest car insurance price index by Confused.com, powered by WTW. Based on more than 6 million quotes over 3 months, it’s the most comprehensive new policy car insurance price index in the UK.

While car insurance prices have been dropping consistently for more than a year, prices are at the lowest point reported since March 2023. With many other motoring costs expected to rise this year, drivers are being urged to take advantage of lower insurance costs by shopping around when renewing their policies. And data shows that shopping around 28 days before renewal could save as much as 53%, on average¹.

This comes as many drivers face an increase in Vehicle Excise Duty (VED) from April, otherwise known as road tax, which is set to rise in line with the Retail Price Index (RPI) inflation². Similarly, EV drivers are no longer exempt from road taxes and will be paying the standard annual rate of £195³.

Another price increase drivers could expect in 2026 is the amount paid in fuel duty⁴. From September, the freeze on fuel duty, which is currently capped at 5p, is set to be reversed. This means fuel duty will rise each year with inflation, making it more expensive to fill up at the pump.

For those who frequently travel through the London congestion zone, prices will increase to £18 per day. And for this, EV drivers will no longer be exempt and could be paying 75% - 100% of the charge per day⁵.

These increases could result in hundreds of pounds worth of extra charges for many drivers next year - while car insurance proves to be bucking the trend and saving drivers money when they shop around.

For some drivers, these savings are significantly greater than the UK average. Younger drivers, in particular, are facing a steep decline in their car insurance costs. 17-year-olds are now paying £1,932 for their car insurance, on average - following a £635 (-25%) drop in prices in 12 months. This is the first time prices have fallen below £2,000 for this age group since March 2023. Similarly, 18-year-olds are now paying £504 (-18%) less for their car insurance year-on-year, which now costs £2,262, on average.

While younger drivers are seeing the greatest savings, they are still paying considerably more than most. But why? Younger drivers are generally less experienced, and have fewer years of no claims discount under their belt. When looking at the risk of an accident or making a claim, this puts them high up the list in the eyes of insurers.

And this is reflected in the fact that prices generally start to drop as drivers get older, gain more experience, and can build up their no claims history. Although, prices don’t drop under £1,000 for drivers until they reach 31, on average. For this age group, premiums are now £946 - a £151 (-14%) decrease compared to 12 months ago. And prices don’t fall in line with the UK average until drivers reach their mid to late 30s. In fact, drivers aged 39 are now paying an average of £779.

Generally, as you’d expect, prices get cheaper for drivers as they get older, with 70-year-olds benefiting from the cheapest premiums of £392, on average. However, the cheaper the premium, the lower the annual decrease seems to be. For 70-year-olds, this is just a 13% drop (-£59) compared to last year. This could be because those paying more for their insurance are statistically at a higher risk of making a claim, which triggered insurers to price them higher in recent years. Today, if these claims have reduced in frequency or cost, insurers may be able to stabilise prices to reflect the lower risk.

It’s a similar picture in different regions of the UK, with some drivers paying more and others saving more when shopping around. Drivers in Manchester and Merseyside, in particular, have seen the biggest savings this past 12 months, with an average reduction of £178 (-18%). This puts the average price of car insurance in the region at £836. The North West follows, where prices have fallen by £123 (-16%) in the past 12 months, to £667, on average.

Meanwhile, drivers in both Outer London and the West Midlands are also now paying less than £1,000. In Outer London, prices have dropped by £164 (-15%) to £917, on average. While in the West Midlands, drivers are now paying £875 - a £140 (-14%) decrease compared to 12 months ago, on average.

Despite prices falling by £186 (-14%), Inner London remains the most expensive area in the UK for car insurance. Drivers in the region are now paying £1,119, on average. Meanwhile, drivers in the South West benefit from the cheapest car insurance costs, at £500, on average. This is a £65 (-12%) decrease year-on-year.

However, further research shows that while car insurance prices are dropping, many aren’t seeing these savings reflected in their renewal price. A survey of 2,000 UK drivers⁶ found that more than 2 in 5 (42%) saw their renewal price increase by £72, on average, compared to the previous year. Of these drivers, almost half (47%) shopped around and switched insurers, saving £87, on average. In comparison, only 29% had a cheaper renewal of £59, on average. However, more than a quarter (26%) decided to shop around, saving a further £63, on average.

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, 71% of UK drivers shop around for car insurance up to 25 days before their policy is due for renewal. 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 day¹.

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:

• Check your mileage: telling your insurer you only drive 5,000 miles a year to get a cheaper price is not only risky, but could cost you more. On average, drivers who cover around 5,000 miles a year pay £776 for their car insurance. In comparison, those who drive 11,000 miles a year pay £603, on average. Driving more miles per year implies a driver has more experience on the road, which could be perceived as a lower risk of making a claim. Whereas low mileage can sometimes imply a lack of regular driving experience, and a higher risk of making a claim. Not only this, but if you try to make a claim on your insurance and you’re over your mileage, your policy could be invalidated.
• Share the driving: If you live with a partner, parent or child who could benefit from using your car from time to time, add them to the insurance. Data shows that those who are the sole driver on a car pay £821 for their insurance, vs. £704 paid for those who have an additional named driver. But don’t lie, if you’re not sharing the car, don’t declare it.
• Enhance your security: Simply put, the harder your car is to steal, the less of a risk it is. And this could mean you get cheaper car insurance. While most cars come with immobiliser and alarm as standard, adding things like a wheel lock or tracking device could save you money. Also consider where your car is parked, especially at night. Opt for a well-lit area if you can. Driveways and residential parking areas generally seem to be considered a lower risk. While those who park in a road away from their home pay as much as 70% more, on average⁷.

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

Rhydian Jones, motoring expert at Confused.com car insurance, comments,

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Notes to editors