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 necessary evil. Not only is it a legal requirement for driving on UK roads, but it’ll protect you financially if your car is stolen or involved in an accident. Some of the things that affect the cost of car insurance are outside of your control – such as your age. But there are other factors you can control, and plenty of ways to keep costs to a minimum.

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

The average cost for comprehensive car insurance across the UK is £416 per year, based on Association of British Insurers (ABI) data for the first quarter of 2022. That’s a 5% drop on the previous quarter. But it’s still a substantial expense, especially at a time when the overall cost of living is on the rise. And for drivers under 25, the cost can leap considerably higher.

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. It looks at the price consumers pay for their cover, rather than the price they are quoted.

However, the price you pay as an individual depends on a whole host of factors and may be much higher or lower than average. These include 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.

What are the key things that affect the cost of car insurance?

Car insurers take a huge number of factors into account when setting car insurance premiums. The car itself will obviously play a big part in this, but some other crucial criteria are your age, where you live, and your driving history. Evidence shows that each of these has a substantial impact on the risk of you being involved in an incident. Insurers are all about managing risk, so the higher the risk you pose, the more your insurance will cost.

How does my age affect the cost of car insurance?

Young drivers, under the age of 25, are statistically more likely to be involved in an accident. Data published by the ABI shows they are more likely to make a claim, and for that claim to be costly, so they tend to pay more.

After the age of 25, claims frequency and the average size of claims both gradually decrease until drivers are in their early 60s, and premiums fall in line with this. However, it’s not all smooth sailing for older drivers. From the age of around 70, the claims trend reverses, with the average claim size for over-80s similar to that for 18-20-year-olds. So you may see your premiums rise in later life.

How does location affect the cost of car insurance?

Most people would assume that where they live would have some bearing on the cost of car insurance. So you might think (and in many cases you’d be right) that those living and driving in big, urban areas will be at higher risk, and pay more, than those that live in the countryside.

But the link isn’t always as obvious as you might think, and there might be nuances at play. One area of a big city might be more prone to car thefts than another, for example. Meanwhile areas that tend to experience very bad weather conditions – such as flooding – might be considered higher risk whether they’re urban or rural.

The specific location where your car is parked will also make a difference. Parking your car in a locked garage or on a secure driveway is likely to make for lower premiums than parking it on a busy roadside.

How does my driving history affect the cost of car insurance?

This goes beyond just your years of driving experience. Insurers take two key factors into account. First, your history of making claims. The more car insurance claims you’ve made in the past, the higher your premiums will generally be. It’s not just about compensating for the cost of claims you’ve already made. If you’ve already made a claim (or claims), insurers will perceive you as more likely to make further claims, and increase your risk level.

Driving convictions will also tell against you. If you’ve been caught speeding or driving under the influence, you need to tell your insurer. If you don’t, you risk invalidating your insurance. The more driving offences you’ve committed, the more you can expect to pay for your car insurance.

What else influences the cost of car insurance?

Your individual circumstances, your car and the policy you choose will all affect the price you pay for car insurance. We’ve summarised most of the key factors below. 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 driver of the vehicle:

  • 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. The impact of some jobs on car insurance premiums is less obvious. Medical professionals or bar staff, for example, may pay more to reflect the unsociable hours they may use their car – for example having to drive at night.
  • 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.
  • Named drivers. Only certain people will be approved to drive your car. All of them can affect the cost. If you’re an experienced driver, adding your less experienced son or daughter to your policy could push premiums up. Though the reverse is also true, and less experienced drivers can reduce their premiums by adding an older driver with a clean driving record.
  • Typical driving habits. How many miles you drive each year and whether you use your car to commute to work can play a part in your car insurance prices.

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How can I save on my policy? You have little control over some 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 that 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. All of the factors below will feed into a vehicle’s car insurance group. This can in turn have a big influence on the price you pay. Some factors affect the chance of an incident in the first place, whereas others affect the size of the claim if you need to make one.

  • 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.
  • How powerful a car is. High-performance sports cars that are more likely to be driven to extremes. This makes them more likely to be involved in accidents, which can result in higher premiums.
  • Car security. Car microdotting, immobilisers, alarms and other anti-theft measures make a difference to overall risk. Boosting security will get you lower prices with some insurers. 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.
  • Car safety. The safer a car is for its drivers and passengers, the cheaper it is to insure. So, insurers will look out for safety features, plus how the car fares in official safety tests.
  • 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.

What’s the cheapest type of car insurance policy?

Every driver in the UK is required by law to have at least third party car insurance. It’s the most basic type of cover, but this doesn’t necessarily mean it’s always the cheapest. In some cases, you might be able to get comprehensive cover for the same price, or even less, than third party cover. Be sure to compare comprehensive car insurance with third party car insurance to get the best deal.

There are other aspects of cover that can also affect the price you pay, including:

  • Your excess. The excess is an amount you need to pay before claiming on car insurance. Most car insurers set a minimum, compulsory excess, but you can choose how much you pay on top of this (often known as a voluntary excess). Choosing a higher excess will usually lower your premiums, while a lower excess will increase your premiums.
  • Optional extras. 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. Just don’t set it so high that you can’t afford it if you need to claim.
  • Drop extras. Think carefully before paying for extra cover options. Only pick those you think you are likely to benefit from.

Will the cost of my car insurance go up after an accident?

Almost certainly. Even relatively minor accidents can affect your future car insurance premiums. How eye-watering the increase is will depend on a number of factors, including whether you’ve been involved in accidents previously.

Most people would probably expect premiums to rise if you make a car insurance claim following an accident. It may come as more of a surprise that premiums can rise even if you don’t claim. That’s because car insurers will think you’re at a higher risk of future accidents. Don’t be tempted not to tell your insurer about a prang, though. It could invalidate your insurance, and this could have much bigger consequences.

Why has my car insurance gone up for no apparent reason?

Danny Butler

Finder insurance expert Danny Butler answers

This can be one of the most frustrating realities to get to grip with. Why on earth does your car insurance rise when you haven’t claimed, had an accident, or made any changes?

As a general rule, safe driving and stability are rewarded. And, at least in the first few years of buying car insurance, accumulating claim-free years will boost your no-claims bonus – a discount on your headline premiums. So, all else being equal, you would reasonably expect premiums to go down over time.

But most insurers cap their no-claims discount at a certain level. There will come a point when the level of discount will stop growing. And, even if this isn’t the case, there may be factors that drive your premium up more than the discount brings it down. One of these is age. As we highlighted above, drivers in their 70s and 80s become (on average) more likely to make a claim. So, sadly, you may find that your premiums start to rise after you turn 70.

Plus, sometimes, external factors play a part. For example, if the cost of replacement car parts increases, or the government puts up the cost of insurance premium tax (IPT), car insurers are likely to pass these costs on to their customers.

One piece of good news. It used to be the case that loyalty did the opposite of paying, and insurers often charged loyal customers renewing their policy much more than they’d charge a new customer with exactly the same risk profile. Since January 2022, they’re not allowed to do this, after the Financial Conduct Authority banned the so-called “loyalty penalty“.

How can I get cheaper car insurance?

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

  • Pay annually. If you can afford to, always pay for your car insurance upfront each year. Paying 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.
  • Take an advanced driving course. Courses such as the Pass Plus scheme and IAM RoadSmart can help you to improve your driving skills. Many insurers will reduce your car insurance premiums as a result.
  • Boost security. If you can, park your vehicle on a driveway or in a garage rather than leaving your car parked on a street.
  • Build up your no claims bonus. Consider carefully before claiming on your car insurance. While you have to tell your insurer about incidents, if you don’t claim then your premiums may not rise as much. And 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.
  • 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. 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.
  • Reduce your mileage. The fewer miles you drive each year, the less you will typically pay for car insurance.
  • Adjust your optional extras. Renewal time also lets you adjust your policy options, including your chosen extras and excess, which could help you to save money.
  • Add a more experienced named driver. If you’re new to driving, or have other personal risk factors that could drive up premiums, then adding an experienced driver with a clean record as a named driver could help manage costs.
  • 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.
  • 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.

Is it cheaper to pay for car insurance annually or monthly?

Definitely annually. If you can, paying for a full year of cover up front is almost always the cheapest option.

If you pay in monthly instalments, you’re effectively “borrowing” the full cost of cover from the insurer. It’ll charge you interest for this, and you’ll end up paying more in the long run. In one scenario, we found that paying monthly rather than annually added about 10% to insurance costs.

Is third party car insurance cheaper than comprehensive cover?

Not necessarily.

Third party car insurance only covers you for any damage you cause to other people’s cars or property, while comprehensive cover also covers damage to your own car from accidents, fire, theft, vandalism and more, plus theft of your car. So, logically, third party cover should be cheaper.

Bu this isn’t always the case. Some people may find that comprehensive cover is just as cheap, if not cheaper, than buying third party cover for the same car. This slightly counterintuitive state of affairs came about in response to the fact that, historically, high-risk customers have been more likely to take out lower-protection (and traditionally cheaper) policies. So some insurers raised the premium costs for drivers taking out third party or third party, fire and theft cover.

In short: never go straight for third party cover without checking all your options.

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 55,000 fraudulent car insurance claims worth £602 million were uncovered by insurers in 2020.

Referral fees can also push 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.

Bottom line

Car insurance is likely to set you back a good few hundred quid a year on average, with higher-risk drivers paying much more. While you can’t legally drive on UK roads without car insurance, and should never be tempted to fib to your insurer to keep costs down, there are a number of legitimate ways to cut costs. One of the main ones is to always shop around at renewal to see whether you can save by switching to a different car insurance provider. Though keep in mind that cheapest isn’t necessarily best – always look to see which insurer can give you the best value for your specific needs.

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*Based on data provided by Consumer Intelligence Ltd, www.consumerintelligence.com (July ’22). 51% of car insurance customers could save £341.77

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