Blow for drivers as price of car insurance rises for first time in three years

The average cost of car insurance has risen for the first time in three years, figures have revealed.

According to price comparison website Confused.com, drivers are now paying £719 a year on average for their motor cover, up £8 in the past three months.

While prices remain £38 cheaper than a year ago, the latest data suggests the long-running trend of falling premiums may be starting to reverse.

The U-turn has been seemingly been driven by insurers face rising costs, with the average value of an insurance claim soaring by 42% since 2020.

With almost half of drivers reporting a higher renewal price in the last three months, motorists could soon see further increases when it comes to updating their cover, Confused.com warned.

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The research comes from latest car insurance price index by Confused.com and WTW and is based on more than six million car insurance quotes.

The average cost motor premiums have been decreasing since the start of 2023. It followed a period of steep increases as insurers adjusted their pricing to reflect the economic fallout of the Covid crisis.

Yet data Confused.com found the cost of claims made by customers - a key consideration when it comes to how much drivers pay - has been increasing in recent years. This could be causing insurers to adjust their prices to reflect the risk of having to pay out more, it explained.

According to the research, the average payout per claims jumped by 42% between 2020 and 2025 - from £3,842 to £5,464.

However, the number of claims being made over the same period has in fact dropped by 59%, suggesting that while fewer incidents are being reported, when they are, they are considerably more expensive to put right.

Matt Crole-Rees, motoring expert at Confused.com car insurance, said: “Drivers have benefitted from car insurance price drops for some time now. But now we’re seeing that prices are starting to increase slightly in recent months, which means motorists could soon see their price increase when it comes to their renewal.

“Car insurance prices are generally calculated based on risk and claims. And while there have been fewer reported claims in recent years, the increases we’re starting to see are likely down to the fact that when a claim is made, it’s more expensive for insurers to rectify. This isn’t something drivers can control, but it doesn’t mean to say they can’t still save money on their insurance.

“Shopping around when it comes to renewal is key to knowing you’re getting the best price. But not leaving it to the last minute could mean you save even more. That’s as our data shows that getting a quote 28 days before your renewal is due could save you as much as 53% on your price. So being organised and getting it sorted early can pay off.”

• Don’t over or underestimate your mileage: telling your insurer you only drive 4,000 miles a year to get a cheaper price doesn’t just put you at risk of invalidating your insurance - it could cost you more. On average, drivers covering around 4,000 miles a year pay £772 for their car insurance, compared to £614 for those who drive 12,000 miles. Driving more miles per year can suggest greater experience behind the wheel, which insurers may view as a lower risk. Lower mileage can sometimes indicate less regular driving experience and therefore a higher risk of making a claim. Equally, if you estimate your mileage too high, you could be paying more than you need to as spending more than the average amount of time on the road could indicate a higher risk of a claim.
• Share the driving: If you live with a partner, parent or child who could benefit from using your car from time to time, add them to the insurance. Data shows that those who are the sole driver on a car pay £811 for their insurance vs £697 paid by those who have an additional named driver. But be honest, if you’re not sharing the car, don’t declare it.
• Enhance your security: Simply put, the harder your car is to steal, the less of a risk it is. And this could mean you get cheaper car insurance. While most cars come with an immobiliser and alarm as standard, adding things like a wheel lock or tracking device could save you money. Also consider where your car is parked, especially at night. Opt for a well-lit area if you can. Driveways and residential parking areas generally seem to be considered a lower risk.