Car insurance prices up almost £300 in 12 months, but drivers offered some respite to start the year

Car and pen on insurance documents. Car insurance concept.

Drivers are continuing to pay more for their car insurance as prices accelerate by £284 (43%) in 12 months, new data reveals.

The average cost of taking out a new car insurance policy in the UK is now £941, as prices continue to increase at a rapid pace. That’s according to the latest car insurance price index from Confused.com, powered by WTW. Based on more than 6 million quotes per quarter, it’s the most comprehensive car insurance price index for new policies in the UK.

However, while prices are higher for those shopping around annually for their car insurance, the data shows that the cost of car insurance dipped slightly at the beginning of the year. This is as prices fell by £54 (-5%) between January and March this year, offering some drivers some respite from significant increases. But even though prices have dropped compared to the end of last year, drivers are still paying more now than they were at their last point of renewal.

In fact, in some cases, drivers are paying significantly more now than they were at a younger age. This is because car insurance prices spiked last year as the insurance industry recovered from the turbulence of COVID-19. For example, a 22-year-old driver is now paying £667 more than they possibly were 5 years ago.

Today, a 22-year-old can expect to pay £1,930 for their car insurance. But in comparison, 5 years ago, a 17-year-old was paying £1,263, on average. This is true for all age groups. In some cases, they’re now paying hundreds of pounds more than they would’ve at their age 5 years ago. Even though they may have gained more driving experience and built a no claims bonus.

Difference in prices over 5 years

Age now (Q1 2024)Premium now (Q1 2024)Age 5 years ago (Q1 2019)Premium 5 years ago (Q1 2019)Difference
22£1,93017£1,263+£667
35£1,12630£751+£375
45£89240£615+£277
55£66650£489+£177
65£54560£421+£124

And it seems that most drivers are recognising the impact on the steep increases over the past year. Further research by Confused.com found that more than 2 in 5 (43%) UK drivers claim they are paying more for their insurance now than ever before. And only 1 in 7 (15%) claim they are happy with the amount they pay for their car insurance.

Despite their loyalty, renewing customers are also seeing their prices increase significantly. But some were able to save money by shopping around. According to the research, of those who received their renewal between January and March this year, 3 in 4 (75%) received a more expensive price compared to the previous year. According to the research, these drivers saw their renewal price increase by £94, on average. After receiving their price, almost half (45%) went on to shop around and switch insurers, saving £90 compared to last year’s price, on average.

This shows that even while premiums are still high, drivers could save money by switching to another insurer, rather than sticking with their renewal.

How much a driver is paying for their insurance very much depends on where they live, or how old they are. For example, men are now paying £1,001 for their car insurance, on average. While this is a £60 (-6%) drop in the average price compared to 3 months ago, this is still £299 (43%) more expensive than premiums for male drivers 12 months ago. In comparison, female drivers are paying £841 for their insurance – a £258 (44%) increase year-on-year. This has, however, dropped by £43 (-5%) in the past 3 months.

Similarly, prices can vary in different regions across the UK, with some paying significantly more than others. Motorists in Inner London can now expect to pay £1,501 for their car insurance, on average. While this has dropped by £106 (-7%) in 3 months, drivers buying their car insurance in the last quarter are still paying £434 (41%) more than 12 months ago.

Prices in Northern Ireland have dropped the most over the past quarter, with premiums now 8% (£83) lower than 3 months ago. This means drivers in the region are now paying £968, on average. However, this is still £264 (38%) more expensive than 12 months ago.

Some age groups are also paying out more for their insurance, with younger drivers typically bearing the brunt of expensive premiums. For example, 18-year-olds are now paying £3,145 for their car insurance, which is an increase of a staggering £1,300 (70%) in the past 12 months. For drivers of this age, prices only dropped by £17 (-1%) in the past 3 months, which is significantly lower than the average decrease in the UK.

While prices dropped for most, the price for 17-year-olds is the only age group to have increased this last quarter. Motorists of this age are now paying £2,919, on average, for their car insurance. This is £1,307 (81%) more expensive year-on-year, and £42 (+1%) higher than 3 months ago. This is the most expensive price recorded for this age group.

Meanwhile prices for 28-year-olds fell the most over the past 3 months, with premiums now 9% (-£139) cheaper, on average. This brings the average premium for drivers of this age to £1,353. However, this is still £403 (42%) more expensive year-on-year.

Even with prices seemingly starting to drop, drivers are still paying over the odds for their premiums. But why are prices still so high? Inflation has played a key role in the rise of car insurance costs, due to the impact on the cost of repairs and claims.

Since the end of the pandemic, the number of cars on the road has increased to a normal, if not inflated level. This means the risk of accidents and claims is a lot higher than before. And the amount insurers are having to pay for these claims has increased too, as parts and labour costs are all impacted by inflation. Similarly, cars are holding their value for longer, or are generally equipped with more technology or expensive equipment. This means the cost to replace a car is more than before too. So while inflation remains high, insurers are paying more to cover the cost of claims. This is reflected in the prices they’re offering drivers for their car insurance.

There are some tips drivers can try to keep costs down when it comes to renewal.

  • Use a price comparison site – When it comes to keeping costs down, the best thing you can do is compare prices. That way you can ensure you’re getting the best deal to suit your needs and not paying more than you need to. And it’s likely that you can make a saving.
  • Pay for your car insurance annually – If you can afford it, pay for your insurance in one go rather than monthly. That’s because insurance companies often charge interest for spreading the cost of your cover over the year.
  • Increase your voluntary excess – Increasing your voluntary excess can help you get cheaper car insurance. But you need to make sure you can afford to pay it, if you need to claim.
  • Be accurate with mileage – Generally, the more miles you drive, the more likely you are to have an accident and make a claim. This means the higher your mileage, the more you pay for your car insurance. So, driving fewer miles can be a great way to save money on your car insurance policy. But don’t assume that a low mileage always means low prices. If you barely drive at all, your insurance company could see that as a risk as well.
  • Enhance your car security – The harder it is to steal your car, the less of a risk it is. This usually means cheaper car insurance. There are several ways to improve your car security including:
    • Installing a Thatcham-approved car alarm or immobiliser, if it doesn’t already have one
    • Adding secondary levels of security like a steering lock
    • Parking overnight in a secure, well-lit car park, or at home in a garage or driveway, if possible

For more advice on how to reduce costs, visit Confused.com’s guide on how to get cheaper car insurance.

Louise Thomas, motoring expert at Confused.com car insurance comments: “For the first time in a while car insurance prices have stalled slightly for most drivers, and this may come as a relief. However, prices are still incredibly high and so people can expect to see their price increase compared to the previous year.

“The important thing to remember is that you don’t have to accept your renewal, especially as we know from our research that shopping around can find you a cheaper price. And on top of this, there are additional ways you can save as well. Choosing a higher voluntary excess can bring down your overall premium – but remember to only choose a price you can afford should you need to make a claim. And if you can, paying annually will save you money too, as monthly payments can incur an interest charge. If these aren’t viable options, things like increasing your security or reviewing your mileage to be more accurate could make a difference when quoting.

“Ultimately, shopping around is the only way to know you’re paying the cheapest price available to you. With prices so high, it’s a very competitive market. So if you look around, there’s likely to be an insurer out there willing to offer a cheaper price. We’re so certain that we offer a guarantee to beat your renewal, or pay you the difference, plus £20. In this scenario, you not only get the best price, but you also get more cash. So there’s nothing to lose and lots to be gained.”

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