What is the average car insurance cost?

Tips on navigating this rising cost.

The average car insurance cost has been going up in recent years. 

Every driver will pay a slightly different amount to get their vehicle covered — depending on your level of driving experience, whether you’ve had any accidents, and the kind of car you drive. But due to the pandemic and inflation, costs have generally risen for everyone. 

So, what’s the average car insurance cost? It’s useful to know, because it can help you see if you’re overpaying and whether you can get a better rate elsewhere. 

Here, we explore average prices, why they’ve gone up, and how to get a better deal in future. 

What is the average car insurance cost in the UK?

The average cost of an annual car insurance deal was £478 in the first three months of 2023.

That’s according to data from the Association of British Insurers (ABI). Its Motor Insurance Premium Tracker monitors the changes in prices consumers pay for cover. 

ABI found that the average cost for people renewing their car insurance was £436, while the premium for people taking out a new policy was £545. 

A different study, by Confused.com’s car insurance price index, tracked the price of comprehensive car insurance policies specifically. These policies offer the highest level of cover, including damage to both your vehicle and someone else’s, even if you’re at fault.

Comprehensive car insurance tends to be more expensive. In fact, Confused.com found that the average cost of comprehensive car insurance was £657 in the first three months of 2023.

It’s worth pointing out that prices can differ dramatically by region. For instance, in London the average cost was £1,067, while in central Scotland it was £573.

How much is first-year car insurance in the UK?

The most expensive insurance premiums are usually those covering young drivers or people who have just passed their test. That’s because these drivers are less experienced, and so insurance companies reckon they’re more likely to make a claim. 

The difference that makes for average car insurance costs is pretty dramatic. For example, according to Confused.com again, 18-year-olds are charged an average of £1,845 to insure their car. By age 30, that cost has dropped to £886. Meanwhile, 69-year-olds tend to pay only a fraction of that at £368. 

Part of that is due to what’s known as a no-claims bonus (NCB). It’s a sort of discount you get on your insurance if you haven’t made any sort of claim in the past. Obviously, first-year drivers can’t have one, so it’s another reason why they’re likely to pay more.

Has car insurance increased in 2023 in the UK? 

If you’ve been looking to renew your cover recently, you’ll likely have noticed that the cost of car insurance has increased in 2023. In fact, insurance premiums are the most expensive they’ve been in over a decade.

The ABI’s data shows that the average car insurance cost is up 2% on the previous quarter, while Confused.com suggests that insurance prices are up 20% over the past year. 

Some motorists have seen their insurance prices increase by as much as 70%. 

While different drivers will see prices go up at different rates, there are some clear reasons why you may be paying more:

  • Inflation. Simply, the price of everything has gone up. For example, average costs of things like paint and materials have increased by 16% (according to the ABI), while supply chain issues have made it more difficult for garages to get hold of the parts they need. 
  • Increased energy costs. This is another aspect of inflation. As energy prices have gone up, the running costs for mechanics have gone up, too. And if mechanics are charging more for repairs, then insurers are having to pay more for every accident. 
  • Adjustments after the pandemic. The cost of car insurance actually went down during 2021, due largely to changing work habits and fewer people on the road (and so less risk of accidents). But now, people are driving at pre-pandemic levels once more, with more insurance claims being made as a result. 
  • More second-hand cars. In the wake of the pandemic, the UK saw increased demand for used cars due to pent up demand and a shortage of parts for new cars. But second-hand cars tend to be more expensive to insure and so they pushed average insurance costs up.

There’s no doubt that it’s an expensive time to insure your car. But there are some steps you can take to ensure you’re only paying what you need to. 

How to get cheaper car insurance? 

1. Shop around

Firstly, it’s important to be aware that simply renewing your deal with the same insurer may not be the most cost-effective choice. While it may be the easiest option, it’s probably not the cheapest. 

Before 2022, car insurers would typically offer discounts for new customers and charge existing customers more to balance the price. While this “loyalty penalty” is now technically banned, it still doesn’t actually make your existing insurer the cheapest option.

Instead, shop around — or speak to an insurance broker who can help find the best deal for you. 

2. Protect your no-claims bonus

We mentioned above that NCBs can give you a discount on your car insurance. To keep your costs as low as possible, NCBs really are your best friend. 

If you didn’t make a claim on your car insurance last year, you should have at least one year’s NCB, which can bring your premium down. Most insurers will accept up to five years of NCBs. 

Driving safely is one of the best ways to avoid making a claim. But if you have a very minor scrape, you might consider not making a claim to keep your insurance costs low. 

3. Consider changing your insurance details

Different types of insurance come with different costs. Changing the kind of insurance you have and what’s included in the cover can be another way to save money. 

For example, if you currently have comprehensive insurance, you could switch to third-party instead. The difference is that, if you have an accident, the damage done to the other person’s vehicle will be covered by the insurance — but you’ll have to pay for the damage to your own car.

It’s not for everyone, particularly as it can leave you a little vulnerable. But it can bring your premium down. 

Alternatively, increase your excess to reduce your annual premium. This is the fixed amount you have to pay if you make a claim. For example, if your excess is £250 and the damage to your car is £1,000, you’ll pay the first £250 and the insurer will pay the rest. 

Typically, if you increase your excess, you’ll reduce the overall cost of your premium. 

4. Change your vehicle and how you use it

A more radical way to reduce your car insurance cost is to change the way you use your car, or to change the vehicle itself. 

There are many factors that affect how much you pay on your car insurance, including:

  • Your mileage. The more you drive, the greater the chance of an accident. By driving less, you’ll often pay less too.
  • How you use your car. If you use your car for work or for commuting, you’ll likely be driving on busier roads — and be more at risk of an accident. If you only use your car for leisure, your insurance will likely be cheaper.
  • The type of car you drive. If your car is very old, powerful, or valuable, you’ll likely pay more on insurance. The same is true if you’ve modified your vehicle at all. 
  • Your car’s security. If it has an alarm or immobiliser, you’ll often pay less on insurance. And if you keep it in a garage, rather than on the street, you may pay less, too. 

There are lots of other factors that affect the cost of your car insurance — not all of them under your control, such as where you live. But if you can change the way you use your car, you may make big savings in the long run. 

5. Combine policies

When you have many different things to insure, it can make sense to bundle the costs together to make savings.

For example, with Howden, you can insure your car and home together, saving you as much as £303. 

Quick summary: Average car insurance costs

Car insurance costs are at the highest they’ve been in years. You can expect to pay an average of £478 for your insurance premium.

The increased costs are down to inflation, supply chain issues, and the lingering effects of the pandemic. Yet there are some ways to reduce your premium. 

Protecting your no-claims bonus, changing up your insurance or your driving habits, or combining your car and home insurance can all be helpful. 

Whatever situation you’re in, an insurance broker can help. Get in touch with us at Howden to save yourself time and money.

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