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Car insurance UK price index

Check out the typical cost of car insurance based on seven years of data derived from millions of customer quotes

Our latest car insurance premium data shows that, while the average fully comprehensive policy was 4.6% cheaper in Q4 of 2019 than in the same period in 2018, it has fluctuated upwards after a steep fall at the start of the year

Last updated January 2020 • 8 min read

Car insurance prices fluctuate throughout 2019

  • Latest data shows the average comprehensive car insurance policy is £503
  • Fluctuating prices suggest insurers are reacting to a range of factors affecting premium levels
  • Drivers buying insurance in the last quarter of 2019 paid £24 less on average than the same time in 2018

Car insurance premiums rose steeply in the fourth quarter of 2019, according to the latest data from MoneySuperMarket.

The rise of 6.56% in the three months to December took the average cost from £472 to £503. But year-on-year, we have still seen a decline: typical premiums at the end of 2018 were £527.

The first quarter of 2019 saw average premiums tumble by over 9%, all the way down to £480. They edged up to £486 in the second quarter, and then down to £472 in the third. That means they rose by a significant £30.97 pence to reach £503.

The average price of comprehensive car insurance

£503

between October and December

So why the fluctuation in average prices during 2019?

One of the biggest issues occupying car insurers’ minds in recent years has been the discount rate. This is a figure which is applied to large personal injury compensation payments, such as those paid out after a catastrophic car crash, to take account of investment returns once the lump sum is invested.

For many years, the rate in England and Wales was 2.75%, meaning the lump sum would be reduced on the basis that investment profits would make up the difference over the course of several years.

In 2017, the rate was slashed by the government to -0.75%, meaning lump sums would have to be greater than the agreed amount of compensation, the reasoning being that investment returns were generally much lower.

For car insurers, this meant facing the prospect of paying out much more in car insurance accident claims than previously, which led to premiums increasing in 2017 and 2018.

Early in 2019, the government signalled a review of the discount rate, at which point car insurers reduced premiums, anticipating the rate would to move from a negative to a positive figure. However, when the change was announced in August, it only edged up to -0.25%, triggering premium inflation that took firm hold in the fourth quarter.

(The discount rate applicable in Scotland, which is set by the Scottish government, is -0.75%.)

Combined car insurance premiums

 
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Britain’s withdrawal from the EU may lead to a period of economic uncertainty, and this could push premiums higher.

But if the overall number of accidents reduces because of sophisticated technology and telematics policies, then the long-term trend for premiums should be downwards.

Pound Coins

The question drivers face is whether the Q4 increase reflects the full impact of the discount rate change, or whether prices will continue to rise in 2020. There are certainly other factors at play, exerting pressure in both directions.

For example, the process of Britain’s withdrawal from the European Union over the course of the year may lead to a period of economic uncertainty, and this could play into insurance pricing and push premiums higher.

But if the overall number of accidents reduces because of sophisticated technology used on today’s cars (such as autonomous emergency braking) and telematics policies which encourage safer driving, then the long-term trend for premiums should be downwards.

That said, the more advanced technology on board a car, the more expensive the repairs if it is damaged (because parts are expensive and qualified mechanics may be in short supply).

And remember the spate of thefts of advanced keyless car models in 2019, by thieves using devices that hacked the owner’s keys and allowed them to access and start the car? It maybe that other unexpected negative consequences follow future innovations.

Ultimately – and we’re probably talking decades rather than years – fully autonomous vehicles should largely eradicate accidents and reduce insurance costs dramatically. Before then, however, we are likely to see further fluctuations in prices, both for fully comprehensive and for third part and third party fire & theft policies.

Car insurance premiums over time

 
Early in 2019, the government signalled a review of the discount rate, at which point car insurers reduced premiums, anticipating the rate would to move from a negative to a positive figure. However, when the change was announced in August, it only edged up to -0.25%, triggering premium inflation that took firm hold in the fourth quarter.

Average premiums by region

  • East London had the most expensive premiums in Q4 2019 (£1,003)
  • Premiums rose most sharply for drivers in North West London, to an average of £889
  • The biggest fall was in Lincoln, where premiums dropped by 10% to £350

One of the biggest factors determining how much you pay for car insurance is where you live. Insurers take your postcode and look at how many claims come from that area.

Bigger towns and cities tend to have higher crime rates, which can contribute to higher costs.

If you live in a busy town or city where there are lots of cars on busy roads, there is likely to be a higher risk of accident, so your premium will be higher than for someone living in a smaller town, village or rural location.

The incidence of car theft and vandalism in your neighbourhood will also affect the size of your premium, along with factors such as your age, driving history, occupation and, of course, the make, size and value of your car.

Those living in East London had the most expensive premiums in Q4 2019, nearly double the UK average (£1,003). London as a whole had an average premium of £708, compared to £388 in Scotland. Kirkwall in Scotland (£311) had the cheapest premiums of any location where more than 500 quotes were run. Premium increases were rare but rose most sharply for drivers in North West London, rising 3.88% compared to the same period in 2018 to an average of £889. Decreases were more common, and the biggest fall was in Lincoln, where premiums plummeted by 10.43% to £350.

 
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How age and gender affect car insurance costs

  • 17 to 19 year olds pay an average of £995 for a fully comprehensive policy
  • Average premiums for all age groups over the age of 20 increased in the fourth quarter of 2019 – but decreased for all those under 20
  • Nonetheless prices are over three times more expensive for younger drivers than for older motorists

While younger drivers pay a high price for their insurance, they also have the furthest room to fall. And premiums have declined almost 13% over the past year for the 17-19 age bracket, to an average of £995 for a fully comprehensive policy. In fact, only average premiums for those under the age of 20 fell in the fourth quarter of 2019 – and increased for all those over 20.

Drivers aged 20-24 saw their average premiums climb higher even than those aged 17-19 in the fourth quarter of 2019. Drivers aged 20-24 years old now pay an average of £1,008, an increase of nearly 5% compared to the same time period in 2018. Those aged 65 or over on the other hand pay an average of just £286.

Differences between car insurance costs for women and men are also still apparent, despite insurers no longer being legally allowed to take gender into account when setting premiums, thanks to the European Court of Justice’s Gender Directive.

Whatever the trend, it’s always best to shop around when your car insurance comes up for renewal. A little research could result in an average annual saving of up to £270*, so it’s worth running a new quote.

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£286

On average those aged over 65 spend £286 on their car insurance premiums
young adult

17-19 yrs

17-19 year olds pay a high price for their car insurance premiums - £995 on average

Methodology

All premium price data is based on the median cheapest on-screen price for the given period that customers see when running a quote. Premiums are based on MoneySuperMarket customers only and are not representative of the UK average.

From October (Q4) 2018 onwards the on-screen price also includes add-ons in line with the Insurance Distribution Directive (IDD).

*51% of consumers could save up to £270.32 Consumer Intelligence, November 2019.

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