In this guide
Car insurance costs are at record highs and are set to rise even more, according to Admiral, the UK’s largest vehicle insurer. You can’t legally go on the road without buying car insurance, but there are ways to keep rising costs under control. Here we offer some tips.
Since January 2022, insurers have been banned from charging existing customers more than new ones for the same policy. Despite the crackdown on the so-called “loyalty premium”, the price of motor insurance is at an all-time high.
The average annual price paid by drivers is just under £500; an increase of 16% compared to 2022, according to the Association of British Insurers (ABI). The rise is largely down to the increase in costs to repair vehicles, which jumped by 46% to hit a record £2.5bn between April and June this year.
In this article, we cover:
- How much does car insurance cost?
- What are the top ways to reduce the cost of car insurance?
- How much more do young drivers need to pay?
- What are the regional differences in car insurance premiums?
- What are some tips for getting the cheapest car insurance?
If you’re short on time, find cheap car insurance policies with this free comparison tool.
This article may contain affiliate links that can earn us revenue*
How much does car insurance cost?
How much you pay for car insurance will depend on a number of factors. But the ABI has put the average figure for comprehensive cover at £478 for the year – the highest level since 2019.
The ABI said the average renewal price rose by £8 to £436, while a new policy average increased by £14 to £545.
The lowest car insurance rates are often for older drivers who do limited miles in a safe and reliable car that is parked on a drive or in a garage overnight.
Those who opt to pay monthly instead of annually for their car insurance are being hit with an average penalty of £300, or 39% more, according to research by GoCompare and consumer group Which?
Here are some of the factors that insurance companies take into account when calculating your premium:
- Age – Young motorists tend to have to pay substantially more as they are seen as a greater risk due to factors such as inexperience, drink and drugs, over-confidence, and poor hazard perception skills.
- Experience – New drivers have not had the chance to prove they are not a risk for insurers, or build a no-claims track record and so qualify for a bonus and lower premiums.
- Driving history – Do you have any previous accidents or driving convictions?
- Where you live – Insurance premiums vary widely around the country. Crime rates in certain areas are also likely to make a difference.
- Mileage – The more you drive, the larger your premium will be.
- Occupation – Certain professions are deemed riskier by insurers than others. Driving for work may increase your premium as mileage will be greater.
- Car make and age – If it’s appealing to thieves or has a powerful engine, insurance will likely be higher.
- Car security- Do you have an alarm or immobiliser fitted to reduce the risk of theft? You will also pay less if you have off-street parking
- Use of your car – Will you be driving at statistically riskier times such as at night and on busy roads during rush hour, or mainly at weekends?
Read more: Why are car insurance premiums increasing?
Eleven tips to get cheaper car insurance
There are plenty of ways to keep costs down even if you are judged as higher risk. Follow our tips to find out how to make car insurance cheaper.
1. Pick the right level of cover
There are three different levels of car insurance.
- Third-party policy – the legal minimum for driving in the UK. If you are involved in an accident that is your fault, this will cover the cost of the damage to property, including other cars, as well as any personal-injury claims against you.
- Third-party fire and theft – This covers all the above but will also pay out if your car is stolen or damaged by fire.
- Comprehensive cover – This offers all of the benefits of third-party, but will also cover claims for damage to yourself and your own car if you are involved in an accident, whoever is at fault.
Third-party cover is no longer cheaper than comprehensive insurance for many people as you are deemed to be more responsible for wanting the highest level of cover.
When you take out a policy, you will also be offered a range of bolt-on benefits such as:
- Breakdown cover
- Replacing lost or stolen keys
- Legal expenses protection for any fees or losses incurred as a result of an accident that was not your fault
Add-ons ramp up the cost of your cover so consider whether you really need them and whether you might already have that cover elsewhere.
For example, some home insurance policies offer cover for motor-related issues – but do check the policy wording carefully.
Breakdown cover provides valuable peace of mind, but check whether you could get better value buying it as a separate policy.
In January 2022, new rules came in meaning UK insurers now banned from offering cheaper prices to new customers for home and motor insurance. As a result, if you who regularly switch insurer, you may find your bills become more expensive when your existing deal expires.
2. Compare quotes
It’s important to search the market for a competitive insurance deal when you first buy your car and then each year when it comes to renewing your policy. Check out Times Money Mentor’s a handy comparison tool.
It’s also worth trying other comparison sites too, such as MoneySuperMarket and Comparethemarket in order to boost your chances of finding the cheapest policy.
Remember though that cheapest isn’t necessarily the best. Always compare the level of cover offered by the different policies, not just the price.
If you have more than one vehicle in your household, it’s worth asking about multi-car discounts. The more cars you are able to insure on one policy, the greater the discount can be.
However, you should always compare the cost of insuring your cars separately first.
3. Pay annually
It may feel more manageable to pay for your car insurance monthly, but it could bump up your bill because insurers tend to charge you interest to spread the cost over the year.
If you can afford to, consider paying it all in one go upfront. A 0% credit card could be a good way to spread the cost without paying interest but make sure that you follow the rules and have a repayment plan. Check out our round up of the best 0% credit card deals.
4. Get the right type of car
If the cost of insurance is a worry, think about the type of car you buy. Fast cars with cheap insurance are, unfortunately, hard to come by.
Cars are placed in insurance groups rated from 1-50, with those at the bottom end of the scale cheapest to insure.
What group your car falls into will depend on a variety of factors including its value new, repair costs, safety and security features and performance.
Popular cars that are cheap to insure (with a rating between 1 and 10) include the:
You can check what insurance group your car is in at the Thatcham website.
5. Keep your car safe
You can reduce the amount that you pay for cover by adding extra security features such as alarms and immobilisers.
Insurance companies will also want to know where your car is parked overnight. You will pay less if you have access to off-street parking as the risk of theft or vandalism is reduced.
6. Get black box insurance
Black box insurance – also known as telematics – involves having a device fitted to your car, or an app on your phone, to monitor how you drive.
This will include your speed and mileage, as well as acceleration, cornering and braking. It will also record how many journeys you make, their duration and the roads you drive on and at what times.
The insurer will then be able to price your cover based on your own driving – rather than on, say, the general claims risk presented by people in your age group. The better your performance, the less you will pay.
This may be the best insurance for young motorists, so long as you drive carefully and responsibly.
7. Add an extra driver
Cheap insurance for first-time drivers is hard to find. Young motorists, however, can reduce their costs by adding a named driver such as a parent or other family member to their policy.
With a more experienced driver using the car, the insurer will consider risks to be shared and offer a cheaper premium.
It’s important, however, that you don’t name a more experienced driver as the primary driver if you will be driving most. This is known as “fronting” – it’s illegal and could invalidate your insurance.
8. Increase your excess
Another option in bringing down the upfront cost of car cover is to increase your voluntary excess, which is the amount you agree to pay towards the cost of any claim.
Although it’s a good way of cutting your premium, it’s important not to agree to an excess that you would struggle to pay if you needed to claim.
9. Tweak your job title
When you sign up for car insurance quotes, you’ll be asked to provide your job title. This has a bearing on the insurance premiums you’ll be shown.
By making small changes to your job title, you might be eligible for cheaper quotes. However, it’s vital that any job title you provide accurately describes what you do. If it doesn’t, it’s fraud and it’s illegal.
For example, entering ‘solicitor’ instead of just ‘lawyer’ could make premiums over 10% cheaper. Putting ‘lawyer’ instead of ‘barrister’ however can also cut costs.
It’s best to fiddle around with a few different job titles when searching for quotes – just make sure whichever one you go with is accurate.
10. Drive fewer miles
The more you drive your vehicle, the more your insurance will cost.
If you can’t reduce the number and length of your journeys, you should at least give your insurer a realistic estimated mileage as there is no point paying for miles you don’t need.
11. Improve your driving record
For every year you don’t claim on your car insurance, you will build up a no-claims discount on your premium. The longer you can go without having to ask for a payout, the bigger the discount you will get.
You can reduce the risk of being in an accident, so protecting your no-claims discount, by driving as safely as possible. This means staying within speed limits and taking care to brake and accelerate smoothly.
You should also take particular care when driving at night and when weather conditions are poor.
How much more do young drivers need to pay?
Young motorists with limited experience usually pay the most. The average 18-year-old can expect to fork out £1,471 a year, while average 30 year old, in contrast, will pay £790 and that figure drops to to £355 for a 69-year-old.
No single insurer offers the cheapest car insurance for all policy holders. Your age is just one of range of factors taken into consideration when providers work out how much to charge you, so it is important to shop around for the most competitive prices.
Read more: How to make car insurance cheaper for new drivers
What are the regional differences in car insurance premiums?
London is the most expensive region in the UK to insure your car, with motorists in central London hit the hardest. You can expect to pay an average of £936 a year – an increase of 23% on last year, according to Confused. com.
The cheapest regions are in the southwest of England, where cover will set you back £395, and in the Scottish Borders where car insurance is £391 on average.
In the tables below we outline the average costs of car insurance depending on where you live.
England
| Region | Average premium | Annual change |
|---|---|---|
| Leeds/Sheffield | £669 | 13% |
| Inner London | £936 | 16% |
| Outer London | £741 | 14% |
| Manchester/Merseyside | £737 | 14% |
| East Midlands | £575 | 11% |
| North Midlands | £543 | 11% |
| West Midlands | £697 | 12% |
| Northeast | £518 | 13% |
| Northwest | £560 | 13% |
| Central southern | £560 | 14% |
| Southeast | £496 | 14% |
| Southwest | £395 | 14% |
Scotland
| Region | Average premium | Annual change |
|---|---|---|
| Scottish Borders | £391 | 20% |
| Central | £505 | 17% |
| East and northeast | £431 | 19% |
| Highlands and islands | £420 | 17% |
Wales
| Region | Average premium | Annual change |
|---|---|---|
| Central and north | £409 | 16% |
| South | £473 | 12% |
Northern Ireland
| Region | Average premium | Annual change |
|---|---|---|
| Northern Ireland | £631 | 20% |
Read more: How much does it cost to renew my driving licence?
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