Car insurance prices continue to fall in 2020
- MoneySuperMarket’s latest data puts the average cost of an annual comprehensive car insurance policy at £473
- This is a 6% fall compared with nine months ago (last three months of 2019), but 0.2% higher than it was 12 months ago
- Decreases in car insurance costs slowing as lockdown measures ease and vehicle usage and propensity for accident claims increases
Average car insurance premiums fell by £30 in the first nine months of 2020 – putting the typical cost of an annual premium at £473.
With the Covid-19 lockdown in full swing, April, May and June 2020 were perhaps the most unprecedented three months 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 July and September
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, including the fallout from the UK’s departure from the EU back in January.
That said, car insurers have needed to keep some back ‘in the coffers’, following orders on 18 May from industry regulator the Financial Conduct Authority (FCA) to provide assistance for their customers struggling to make car insurance payments due to coronavirus.
Premiums continued to fall in the third quarter of 2020, although the rate of decline slowed during this period. With more drivers returning to the roads as lockdown measures eased, the cost of an average fully comprehensive car insurance premium in the UK is currently £473 – down 6% from £503 at the end of Q4 2019. However, this represents a modest quarter-to-quarter price drop of just 0.3% between Q2 and Q3, which suggests the pace of the fall may be starting to taper 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’.
While not available in every case, financial help could take the form of payment deferrals lasting up to three months – and with applications open until at least 31 October, this may mean insurers put the brakes on further premium falls.
Combined car insurance premiums
However, this represents a modest quarter-to-quarter price drop of just 0.3% between Q2 and Q3, which suggests the pace of the fall may be starting to taper off.
Car insurance premiums over time
““Our research shows that prices continued to fall over Q3 but not at the same rate as the previous quarters this year.
“This might be explained by the easing of lockdown measures and the ensuing increase in traffic on the roads, something insurers will factor into their pricing decisions.
“Whether prices are creeping back up again or not, it’s difficult to say, but if your policy is up for renewal, the best way to make sure you’re getting the right policy for your needs, and at the right price, is to shop around for a better deal– doing so can save you up to £285*.”
*51% of consumers could save up to £284.51 Consumer Intelligence, June 2020 ”
Average premiums by region
- East London drivers continue to pay the most expensive premiums in the third three-month period of 2020, at an average of £950
- Across London, motorists pay an average premium of £679
- Drivers on the Isle of Lewis pay an average of £293, 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 Q3 2020 data shows that drivers living in East London continue to pay the most for premiums at more than double the UK average (£950).
How age and gender affect car insurance costs
- 17 to 19-year-olds pay an average of £823 for a fully comprehensive policy, down 21% in the past 12 months
- Drivers aged between 20 and 24 pay the highest premiums at an average of £917
- Drivers aged between 40 and 49 have seen the biggest price rise, with premiums up 5% or £20 year on year to £422
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 21% in the past year for drivers aged between 17 and 19, with fully comprehensive cover now costing an average of £823 a year. However, premiums have risen compared with the previous quarter.
It’s now drivers in the 20-to-24 age bracket paying the highest annual premiums at £917, whereas drivers aged 65 or over pay the lowest average premiums at just £281 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 £285*, so it’s worth comparing car insurance quotes.
*51% of consumers could save up to £284.51 Consumer Intelligence, June 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).