How much does car insurance cost?

Want to pay less for car insurance? Find out what the average car insurance cost in the UK is and how you can cut your premiums.

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If you own a car, buying car insurance is a legal requirement. However, the amount you pay for your car insurance will depend on a range of factors, including your age, driving experience and car type. Fortunately, there are ways to keep these costs down.

What’s the average car insurance cost in the UK?

The average cost for comprehensive car insurance across the UK is £430 per year (Association of British Insurers data for the second quarter of 2021). For drivers under 25, the cost can leap considerably higher, around £851 per year according to a study by Statista. While for the over-50s with clean records, premiums can plummet.

What influences the cost of car insurance?

Your individual circumstances, your car and the policy you choose will affect the price you pay for car insurance. We’ve broken down the main categories below, and if you want to double down on your expertise check out our in-depth guide on how car insurance premiums are calculated.

Driver details

To help determine how much you’ll pay for car insurance, insurers will want to know some details about the main driver of the vehicle:

  • Age. Young drivers under 25, as well as seniors, generally pay more for car insurance. Drivers under the age of 25 are statistically more likely to be involved in an accident and make a claim, so they usually pay more. Drivers over 70 also tend to pay higher premiums due to insurers’ concerns they may have slower reactions or medical conditions that could increase the risk of an accident.
  • Driving experience. Learner drivers typically pay more, due to their lack of experience, which often compounds the effect of age on premiums.
  • Occupation. Professional drivers, whether behind the wheel of a race car or a delivery van, can expect significantly higher premiums thanks to more time spent on the road.
  • Marital status. Studies have shown that single people are more likely to have a car accident than their married counterparts. If you get married, you could see your premiums decrease right away.
  • Location. Some places are at higher risk of theft, vandalism and other potential hazards, which incurs higher costs. Urban drivers are at higher risk of an accident than people who live in the countryside.
  • Claims history. The more car insurance claims you have made in the past, the higher your premiums will generally be.
  • Driving record. The more driving offences you’ve committed, the more you can expect to pay for your car insurance. If you’ve been caught speeding or driving under the influence, your insurer will likely know about it and raise prices accordingly.
  • Other drivers. Only certain people will be approved to drive your car, and all of them affect the cost. If you’re an experienced driver adding your less experienced son to your policy, you’re likely to see your premiums rise.
  • Typical driving habits. Your typical distance driven, how often you get behind the wheel and where you drive all play a part in your car insurance prices.

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How can I save on my policy? You have little control over most of the above factors, but there are still some steps you can take to lower costs.
  • Be careful listing other drivers. You’ll save money if you’re careful about who you add as a named driver on the policy. If the other driver is more experienced than you, you could reduce the amount you pay for your premiums.
  • Drive safely. Sticking to the speed limit and driving carefully will ensure you don’t end up with fines and points on your licence which can push up your car insurance costs.
  • Consider telematics: If you’re a young driver, telematics or “black box” car insurance policies can help lower your premiums. A black box device is attached to your car to monitor your driving performance and determine how much you pay for cover.

The type of car

Insurers will also take the type of car you drive into account when calculating your premiums.

  • Manufacturer. Cars by manufacturers that are popular in the UK and that have expansive service networks are generally cheaper to insure.
  • Year, make and model. The availability of spare parts and approved mechanics are key factors for determining car repair costs, and subsequently car insurance premiums.
  • Car security. Car microdotting, immobilisers, alarms and other anti-theft measures make a difference to overall risk, and will get you lower prices with some insurers.
  • Car safety. The safer a car is for its drivers and passengers, the cheaper it is to insure.
  • Likelihood of theft. Some cars are much more likely to be stolen than others, simply because of their style or because they are easier to resell. A highly desirable car will often attract higher premiums.
  • Where it’s kept. Whether a car is parked in a locked garage or on the street in a high-crime area will also affect the cost to insure it.
  • Try aftermarket security. Even if your car didn’t have important security features when you bought it, you can still install aftermarket systems. VIN etching, for example, is relatively cheap but can make a big difference. Remember that not all insurers will recognise all security systems, so check in advance.
  • Consider a big car. Larger vehicles are often safer for their drivers, mostly because they just tend to come out on top in accidents with smaller cars. This can translate into reduced premiums, but might not always be worth the cost.
  • Buy a popular model. The more popular your car is, the less you’re likely to pay for insurance.

Image of a red car alongside the stat: In the UK, the average car insurance policy will set you back around £460 a year.

The type of car insurance policy

Every driver in the UK is required by law to have at least third party only car insurance but depending on what other cover you need, the price you pay can change.

  • Type of coverage. You may assume that fully comprehensive cover is more expensive than third party cover – as it provides a greater level of protection – but that’s not always the case. Be sure to compare comprehensive car insurance with third party car insurance to make sure you’re getting the best deal.
  • Excess. The excess is an amount you will need to pay before claiming on car insurance. Choosing a higher excess will usually lower your premiums, while a lower excess will increase your premiums.
  • Optional cover. Most policies will have additional cover options such as breakdown cover or the use of a courtesy car. Some policies will include these as standard while others will require you to pay extra to bolt them onto your policy.

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How can I save money? Find a car insurance policy that matches your needs, including affordability.
  • Choose a higher excess. Paying a higher excess is an easy way to lower premiums but it’s crucial that you make sure you could still afford to pay it.
  • Drop extras. Think carefully before paying for extra cover options – only pick those you think you are likely to benefit from.

How to bring down the cost of car insurance

You can save money by taking control of the factors affecting your car insurance prices wherever possible, and can save even more by following some useful tips. With the cost of car insurance varying so widely, there are opportunities to save a lot of money.

  • Take an advanced driving course: Courses such as the Pass Plus scheme and IAM RoadSmart can help you to improve your driving skills and many insurers will reduce your car insurance premiums as a result.
  • Park carefully. If you can, park your vehicle on a driveway or in a garage rather than leaving your car parked on a street.
  • Consider trading in. You may be shopping for a new vehicle soon so accounting for the potential insurance costs is a good idea. Every car on the market belongs to one of 50 insurance groups and generally, the lower the number, the cheaper it will be to insure. It’s worth checking which group your chosen car falls into before buying.
  • Pay annually. If you can afford to, always pay for your car insurance upfront each year rather than in monthly instalments as this can be more expensive. If you can’t afford to pay in one go, consider using a 0% purchase credit card to spread your payments interest-free over several months.
  • Shop around at renewal. Avoid simply accepting your insurer’s quote at renewal. Instead, take the time to review your cover and see if you could save money by switching car insurance.
  • Adjust your options. Renewal time also lets you adjust your policy options, including your chosen extras and excess, which could help you to save money.
  • Hunt for discounts. Don’t underestimate the power of discounts in the long run. Look for discounts for having car security systems, multi-policy discounts with insurers you’re already a customer of, and generous no claims bonuses for safe drivers.
  • Reduce your mileage: Generally, the fewer miles you drive each year, the less you will pay for car insurance. If you only drive from time to time, you might want to consider pay-as-you-go car insurance.
  • Build up your no claims bonus. Consider carefully before claiming on your car insurance. If it’s only for a small amount, it may not be worth it as you’ll have to pay the excess and you could lose your no claims bonus as well.

Why is car insurance so expensive in the UK?

There are a number of reasons why car insurance is so expensive in the UK, but it’s primarily due to the high cost of claims and the fact that many claims are fraudulent. ABI figures show that a total of 107,000 fraudulent insurance claims worth £1.2 billion were uncovered by insurers in 2019. Shockingly, every five minutes, a fraudulent claim is discovered.

More than 1,500 whiplash claims are made in the UK each day, according to the ABI, costing the insurance industry more than £2 billion a year, and adding £90 to the average car insurance premium.

Referral fees are also pushing up prices for motorists. This is where personal details are sold by car insurance firms to personal injury lawyers after an accident, leading to a rise in compensation claims.

Additionally, there are more than one million uninsured motorists on the UK’s roads. This increases the cost for all insured drivers as the insurance industry has to cover the cost of injury and damage to others following an accident.

How is the average cost of car insurance calculated?

The ABI calculates the average cost of car insurance by using data from several different insurers and looking at the price consumers pay for their cover, rather than the price they are quoted.

However the price you, as an individual, will pay depends on a whole host of factors, including your age, your driving experience, the car you drive, how much repair costs are likely to be, and whether you have previously claimed on your insurance.

Bottom line

With fewer people driving during the COVID-19 lockdown, and fewer claims as a result, car insurance prices have fallen to their lowest levels in four years. This is great news for motorists, but it shouldn’t stop you from shopping around at renewal to see whether you can save by switching to a different car insurance provider and benefit from a cheaper deal.

Keep in mind that cheapest isn’t necessarily best – always look to see which insurer can give you the best value for your specific circumstances.

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*Based on data provided by Consumer Intelligence Ltd, www.consumerintelligence.com (March '21). 51% of car insurance customers could save £228.60.

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