Car insurance prices remain low in 2020
- MoneySuperMarket’s latest data puts the average cost of an annual comprehensive car insurance policy at £490
- This is a 3% fall compared to 12 months ago but premiums have risen by nearly 4% compared to the previous 3 month period (July, August, September)
- Decreases in car insurance costs slowing as lockdown measures ease and vehicle usage and propensity for accident claims increases
Average car insurance premiums remained below £500 throughout 2020 – putting the typical cost of an annual premium at £490.
With the Covid-19 lockdown in full swing, April, May and June 2020 saw perhaps one of the biggest falls in road use in the history of modern motoring.
According to figures from the AA, the volume of traffic on the roads at the start of lockdown (23 March) was just 35% of pre-coronavirus levels – rising to around 75% by the end of June.
The average price of comprehensive car insurance
between October and December
This sudden dearth of cars on the nation’s roads resulted in fewer accidents and fewer claims, putting downward pressure on the cost of car insurance premiums. This far outweighed the impact of any other potential factors on the cost of car premiums.
Although premiums remained low in the fourth quarter of 2020 they did rise slightly in these last three months of the year. This followed a decline in the rate of premium decreases in the previous three month period.
With more drivers returning to the roads as some lockdown measures eased, the cost of an average fully comprehensive car insurance premium in the UK is currently £490 – down 3% from £503 at the end of Q4 2019. However, following a modest quarter-to-quarter price drop of just 0.3% between Q2 and Q3, Q4 premiums are up by 3.65% quarter-to-quarter with the declines seen across the year tapering off.
Another potential reason for this is that industry regulator the Financial Conduct Authority (FCA) has ordered car insurers to provide assistance for their customers struggling to make car insurance payments due to coronavirus – meaning they may need extra money ‘in the coffers’.
This help will typically mean insurers making adjustments to policies – reducing the level of cover or removing add-ons – to bring premium costs down for those in financial difficulty. Insurers can also offer deferrals on premium payments where appropriate, or other tailored help, but this may mean insurers have to put the brakes on further premium falls for other customers.
Combined car insurance premiums
However, Q4 premiums are up by 3.65% quarter-to-quarter with the declines seen across the year tapering off.
Car insurance premiums over time
““After a year of falls, prices have started to rise again – something which could be explained by the fact that roads were busier for much of Q4 due to looser lockdown restrictions in many parts of the country.
“It’s hard to say to whether the rises will continue, though. With new lockdown measures in place as of 5th January, a major fall in traffic could lead to lower prices – at least in the very short term.
“If your policy is up for renewal, the best way to make sure you’re getting the right policy for your needs is to shop around for a better deal”
Average premiums by region
- East London drivers continue to pay the most expensive premiums in the last three-month period of 2020, at an average of £955
- Across London, motorists pay an average premium of £690
- Drivers in Kirkwall in Scotland pay an average of £269, the lowest in the country
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 arise in that area.
In the longer-term, increasingly sophisticated technology should exert further downward pressure on premiums as a result of fewer accidents and fewer claims.
If you live in a busy town or city where there are lots of cars on the 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.
Our latest Q4 2020 data shows that drivers living in East London continue to pay the most for premiums at more than double the UK average (£955).
How age and gender affect car insurance costs
- 17 to 19-year-olds pay an average of £802 for a fully comprehensive policy, down 3% (£21) in the past 3 months
- Drivers aged between 20 and 24 pay the highest premiums at an average of £981
- Drivers in the 20 to 24-year-old range have seen the biggest price rise, with premiums up 7% or £63 compared to the previous 3 months
Age also has a major impact on car insurance premiums, with under-25s paying at least double that of the over-50s.
MoneySuperMarket’s latest data shows that the cost of annual premiums has fallen by 19% in the past year for drivers aged between 17 and 19, with fully comprehensive cover now costing an average of £802 a year. However, premiums have risen compared with the previous quarter.
It continues to be drivers in the 20-to-24 age bracket paying the highest annual premiums at £981, whereas drivers aged 65 or over pay the lowest average premiums at just £274 a year.
Other factors that affect premiums include your driving history, your occupation, and the make, size and value of your vehicle.
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 according to the European Court of Justice’s Gender Directive.
Irrespective of car insurance premium trends, it remains good practice to shop around when your car insurance comes up for renewal. A little research could result in an average annual saving of up to £217*, so it’s worth comparing car insurance quotes.
*51% of consumers could save up to £217.95 Consumer Intelligence, December 2020
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).