Car insurance premiums have dropped by a quarter in two years, according to Compare the Market’s latest data, bringing some relief to UK motorists amid rising living costs. The average premium now stands at £600, down from £762 last year – a 22% annual decrease and the lowest level since October 2022.
Period Average Premium Change (year-on-year) August 2023 £794 – August 2024 £762 –£32 (-4%) August 2025 £600 -£162 (-22%)
Younger motorists benefit most
Drivers aged 16–24 have seen the most dramatic fall, with premiums down £425 year-on-year to £1,336. Those aged 65–79 now pay an average of £325, a modest drop of £63 compared with 2024. Across all age groups, the fall suggests improving market conditions for drivers seeking new policies.
Regional snapshot
The biggest reduction was seen in Yorkshire and The Humber, where premiums fell by £361 – though it remains the most expensive region for cover at £1,221. The South West remains the cheapest area to insure a vehicle, with an average premium of £463.
Shopping around still pays
Compare the Market says more than half of motorists could save up to £473 by comparing quotes instead of auto-renewing. Insurance expert Amy Rootham said: “Many motorists will be delighted that the cost of car insurance is continuing to fall. Drivers should take advantage of this by shopping around for a cheaper deal when their policy ends.”
The firm suggests falling inflation and lower claim levels have helped reduce insurer costs, leading to the widespread price cuts seen this year.
