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Car insurance average cost hits record £924 high

New data reveals how prices have soared by £338 (58%) in just 12 months:


• The cost of car insurance has increased by 19% (£148) in the past 3 months. This is a similar uplift to those seen in the previous Confused.com price index (Q2 2023), showing just how quickly prices are rising.

• Inner London is the most expensive region in the UK, with the average prices now £1,503 - up £567 (61%) in 12 months. Outside the capital, figures in Manchester and Merseyside hit £1,154, on average, following a £417 (57%) annual increase.

• The frequency of claims being made, the rise of electric vehicles and second-hand cars are all reasons why insurance prices could be increasing faster than ever before.

• Despite price rises, drivers can still make savings. Those who used a comparison site to switch after getting a more expensive renewal saved around £88, on average(1).

• Motor expert Louise Thomas at Confused.com car insurance explains how drivers could still save money in the current climate, despite prices going up.

The average cost of car insurance is now £924, breaking records once again as prices continue to grow.


The latest data reveals how prices have soared by £338 (58%), on average, compared to this time last year. That’s according to the latest (Q3 2023) Confused.com car insurance price index, powered by WTW. Based on more than 6 million quotes over the quarter, it’s the most comprehensive car insurance price index for comprehensive policies. And according to the latest figures, the rise is also the highest annual increase since the Confused.com car insurance price index began in 2006. With a 19% (£148) increase in just the past 3 months alone, pricing trends are similar to those seen back in the spring (Q2 2023). This proves just how volatile the market is as it’s clearly moving faster than ever before.


How much are individual drivers paying?


There are many factors that determine how much a driver pays for their insurance. This includes the area they live, their age and the type of vehicle they drive. And that means that some drivers are worse off than others.


The latest data shows how all regions in the UK are seeing the highest prices on record. But it’s drivers in London that are paying the most expensive rates overall. Inner London is the steepest, with the cost of car insurance now £1,503, on average. That means prices have increased by £567 (61%) in just 12 months. In Outer London, prices are now £1,187, on average, following a £446 (60%) annual increase.


Outside of London, drivers in Manchester and Merseyside are seeing annual increases of around £417 (57%). That makes average prices £1,154. And in the West Midlands, the cost of car insurance is £1,139, on average, following a £442 (63%) increase.


When looking at individual ages, younger drivers once again take the brunt of the most expensive prices. Drivers aged 21 and under are all seeing average costs over £2,000. But it’s those aged 18 who continue to pay the most for their car insurance overall. On average, prices are now £2,995. That’s increased by 89% (£1,414) in the past 12 months and by 25% (£591) in the last 3 months, on average. But 17-year-olds might have the biggest surprise of all. That’s as their insurance prices have almost doubled in the past 12 months. Their car insurance prices have increased by £1,262 (93%), on average, meaning prices are now £2,613.


And although younger drivers are the most expensive overall, those in their 30’s could face financial strain too when it comes to their insurance. That’s as the latest data shows how drivers up to the age of 38 aren’t paying less than £1,000 for their car insurance. And with the cost of living still a financial struggle for many, this could potentially mean that driving becomes unaffordable for millions.


And although insurers can’t price by gender, males still see the most expensive prices(2). The average price for men is now £987, following an annual increase of £359 (57%). And for women, prices have increased by £304 (59%). That makes average prices for them £820.

Further research by Confused.com of 2,000 UK drivers(1) also found that the majority were feeling the pinch. Around 3 in 5 (63%) of drivers who renewed in the past 3 months (July to September) had a more expensive price of around £87 more. That’s despite 1 in 4 (26%) saying they had a clean licence and almost 1 in 3 (28%) saying they had 1 or more year’s no claims. Almost a third (28%) also said that they weren’t sure why prices were on the rise.


So why are prices increasing?


There are many reasons why car insurance prices are increasing so rapidly and drivers may feel they’re being penalised unfairly. Especially as the FCA introduced the General Insurance Pricing Practices (GIPP)(3) to ensure pricing was fairer. But adjusting to life after the pandemic and recent industry changes have both had a huge knock-on effect on how much drivers are paying.


The rise of electric vehicles (EVs) continues to grow in popularity, especially due to the government’s ambitious Net Zero plans. Some manufacturers have even announced that they’ll only manufacture EVs going forward. But EVs often come with a hefty price tag and not all drivers can afford them. They often come with enhanced technology features as standard, so can cost the insurer more to repair or replace. But the pandemic has impacted its supply chain, meaning there are often backlogs for drivers. EVs also generally have quicker acceleration speed than other vehicles, so could appear riskier to insurers.


And because EVs aren’t affordable for everyone, second-hand vehicles are also keeping their value for longer, especially since the pandemic. But if a driver has an accident and their vehicle is a write off, this now costs insurers more to pay out. There are also lots more drivers returning to normal driving habits since the pandemic, so naturally there are more drivers on the road. This means claims frequency is increasing, so insurers are paying out more than they have in recent years. All of this plays into the overall risk factor linked with insurance, which is why drivers are likely to see an increase.


How can drivers keep costs down?


With all of this to factor in, it’s understandable that drivers may feel frustrated. Especially as prices seem to be going up in all areas of everyday life right now. But drivers can still make savings, even if the initial price is more expensive than first anticipated.

Data shows how the same drivers with a more expensive renewal between July to September 2023 were able to save around £88 when using a price comparison site. And even though 9% of drivers said they had a cheaper renewal quote, they still saved around £64 by switching. So that proves how drivers can still save money when switching at renewal, whether prices are higher or lower than before.


And although one size doesn’t fit all, there are also some tips drivers can try to keep costs down when it comes to renewal.


• Use a price comparison site - If you’ve had a higher renewal quote, the best thing you can do is compare prices. That way you can ensure you’re getting the best deal to suit your needs and not paying more than you need to. And it’s likely that you can make a saving.

• Pay for your car insurance annually - If you can afford it, paying for your insurance in one go rather than monthly is one way to get cheaper car insurance. That's because insurance companies often charge interest for spreading the cost of your cover over the year.

• Increase your voluntary excess - Increasing your voluntary excess can help you get cheaper car insurance. But you need to make sure you can afford to pay it, if you need to claim.

• Be accurate with mileage - Generally, the more miles you drive, the more likely you are to have an accident and make a claim. This means the higher your mileage, the more you pay for your car insurance. So, driving fewer miles can be a great way to save money on your car insurance policy. But don't assume that a low mileage always means low prices. If you barely drive at all, your insurance company could see that as a risk as well.

• Enhance your car security - The harder it is to steal your car, the less of a risk it is. This usually means cheaper car insurance. There are several ways to improve your car security including:

o Installing a Thatcham-approved car alarm or immobiliser, if it doesn’t already have one

o Adding secondary levels of security like a steering lock.

o Parking overnight in a secure, well-lit car park, or at home in a garage or driveway, if possible.


For more advice on how to reduce costs, visit Confused.com’s guide on how to get cheaper car insurance.


Louise Thomas, motor expert at Confused.com car insurance comments, “For another consecutive quarter, we’ve seen some of the highest inflation rates when it comes to car insurance. With prices up on average £148 (19%) in just 3 months, and £338 (58%) in 12 months, drivers are likely to be paying more than ever. So those who haven’t yet been affected should be wary of how pricing may affect them at their next renewal.


“But there are deals around and drivers can still save money, even if they’ve noticed their renewal has gone up. And in a time of financial uncertainty, this can be really helpful if you’re needing to watch your money more closely than before. So if you’re due to renew, consider ways in which you can keep costs down. Whether it’s reducing your mileage or improving your car security, these can certainly help. But remember to always be truthful to your insurer, otherwise you risk invalidating your policy.


“Our aim is to keep helping customers save money, especially in the current climate. That’s why switching and saving has never been more crucial, and we guarantee savings can be made. We’re so certain that we offer a guarantee to beat your renewal, or pay you the difference, plus £20(4). In this scenario, you not only get the best price, but you also get more cash. So there’s nothing to lose and lots to be gained.”


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