How much does car insurance cost?

Key takeaways

• The cost of car insurance is influenced by various factors including your profession, claims history, and location

• The rise in car insurance can be attributed to an increase in claims pay outs, higher repair costs and longer repair times

• Shop around and compare policies rather than accepting the first quote

• Adding a more experienced driver to your policy can reduce costs for young or inexperienced drivers

Average car insurance cost by quarter 

The amount of money you pay for car insurance is dependent on lots of different things. This includes your profession, your claims history, and where you live. But the price is also determined by market conditions, and in recent years average car insurance costs have been rising steadily.  

This means when your car insurance is ready for renewal, or if you’re buying a policy for the first time, you can expect to pay a lot more than you previously did. Here we look at how prices have changed over the last few years.  

Based on annual price of car insurance policies with one driver holding a full UK driving licence for at least 12 months. 

However, although prices are rising, there are ways to cut costs and one of the most important tricks to keeping your cover costs low is shopping around and comparing prices, rather than choosing the first quote you’re given.

Why is the cost of car insurance going up? 

Car insurance is just one area where prices have risen recently and amid the middle of a cost-of-living crisis, price hikes are never welcome.  

Our data above shows that the price has risen by an average of £204.54, when comparing the average cost during the first quarter of 2022, with the average cost during the last quarter of 2023.  

That’s a huge increase, of almost 40%, and it’s a pattern we’ve seen across the car insurance industry. Prices were up 12% between the third and fourth quarter of 2023, according to the Association of British Insurers (ABI), and cover was 25% more across 2023 than it was in 2022.  

The main reason car insurance costs have risen is that insurers are spending more money on paying out claims than they are receiving in premiums. There are several reasons for this. Firstly, there has been a rise in the cost of repairs, which shot up by 32% between July and September last year, according to the ABI. It said rises to the cost of labour and energy had pushed up prices along with an increase in more sophisticated cars on the road, such as electric vehicles, which require more specialist experts for repairs. It also said longer repair times had pushed up the prices insurers are paying out for providing replacement vehicles.   

The prices we’re talking about here are average car insurance costs, but it’s worth remembering that not all drivers pay these. Young drivers, for example, typically pay the highest car insurance costs because they are seen as a higher risk of having an accident and making a claim.

What affects the cost of car insurance? 

Insurance costs for car cover depend on lots of different things and every car insurance policy is unique, to the driver and the car being insured. But some of the factors insurers take into account when calculating a premium include the following:   

Policy type

There are three policies to choose from when it comes to car insurance. The most basic is third-party only cover, and you can also have third-party only cover plus fire and theft. If you want a policy that will also pay out for repair costs to your car, you’ll need a fully comprehensive policy. The costs vary depending which level of cover you take out, and usually a fully comprehensive policy will be the cheapest.  

Based on annual price of car insurance policies with one driver holding a full UK driving licence for at least 12 months. MoneySuperMarket data, collected between October 2023 and December 2023

Age 

Younger drivers typically pay more for car insurance than drivers in any other category. That’s because insurers see them as the highest risk of having an accident and making a claim. Older drivers, those aged over 50, usually pay the lowest average costs for cover. 

Based on annual price of sold comprehensive car insurance policies. MoneySuperMarket data, collected between October 2023 and December 2023 

Occupation 

Insurers will look at your job when they calculate how much your premiums will be. Jobs that are considered low risk, have lower average premiums, while if you have a profession that is seen as a high risk – and especially one that involves a lot of driving – you can expect to pay more.  

Based on one Main Driver, holding a Full UK Driving Licence, with over 1,000 enquiries by occupation. MoneySuperMarket data collected between November 2022 to January 2023

Location 

Where you live will also impact the price you pay for car insurance. If you live in an area where there is a high crime rate, for example, you will probably pay more than someone who lives in an area of low crime. This is because there will be a higher risk of your car being stolen or being involved in an accident.  

Annual mileage 

The more miles you drive, the higher the risk becomes of you being in an accident or of your car needing repairs. This means if you have a high annual mileage, the risk of you making a claim and your insurer having to pay out rises, so your premiums will also be set at a higher rate than someone with a low annual mileage rate.   

Other factors affecting car insurance premiums 

Your car insurance premium may also be impacted by the following factors: 

• The make, model, and age of your car 

• Your car’s insurance group, all cars are grouped between 1 and 50 with cars in lower-down groups usually being cheaper to insure 

• How long you’ve been driving 

• Where you keep your car at night 

• Any modifications you’ve made to your vehicle 

• If you have any security or anti-theft systems installed 

• Who else drives your car 

• Whether you have a named driver on your policy 

• If you have a no-claims bonus 

Will insurance costs keep rising? 

It’s impossible to predict where car insurance costs will be in a year and we don’t have a crystal ball but we can use our data to estimate what might happen.  

We can also look at wider market conditions, which have been driving up costs. Inflation has been steadily rising over the last few years, pushing up the cost of labour and energy prices, and if it were to continue upwards, insurance costs would be likely to rise too.  

However, inflation has been brought down, and currently sits at 5.1%. While this is above the government's target of 2%, it’s a lot lower than it was at the start of 2023. 

When it comes to costs directly related to insurers and payouts, if the problems of long and costly repair times continue, prices are likely to keep rising. However, the industry is changing and responding to these issues, and while things like electric cars are more expensive to repair at the moment, this won’t always be the case. 

How to get cheaper car insurance 

The bad news is that insurance costs are rising for everyone, and average prices are significantly more now than they were a year ago.  

But the good news is you don’t have to just accept a higher price and there are lots of things you can do to save money and lower your premiums. They include the following:  

• Drive a cheaper car that’s less expensive to insure, our car insurance group checker can show you which group a car will be in 

• Compare costs and shop around when renewing or buying a new car insurance policy, there are lots of policies to choose from so never take the first offer you’re given

• If you’re a young or inexperienced driver, adding a more experienced named driver to your policy could cut your costs 

• Young drivers can also benefit with telematics policies, where the cost can go down if you’re able to show an insurer you’re consistently driving well 

• Keep your annual mileage down, but make sure you are being accurate when you tell your insurer how many miles you plan to drive