Has car insurance gone up in 2025?

The average cost of car insurance in the UK is now £164 (17%) cheaper compared to March 2024.

The national average car insurance premium has fallen to £777, with younger drivers in particular benefitting from a steep decrease in premiums.

Car insurance in the UK reached a record of £995 on average in Q4 of 2023. But costs have been steadily dropping since the beginning of last year.

Are car insurance costs falling?

If we're discussing recent trends, then yes! Car insurance premiums reached a record of £995, on average, in Q4 of 2023. But since then, prices have continued to fall on a quarter-by-quarter basis. The average price of a new policy is more than £160 cheaper compared to March 2024. 

The impact of Covid-19 and a rise in UK inflation, among other factors, drove car insurance premiums to record levels. But despite recent trends of declining car insurance costs, if you go further back, premiums are still higher now than they have been in the past.

Drivers in the UK are generally paying considerably less for their car insurance compared to record high figures. But some were able to save more than others. Those choosing not to accept their renewal price were able to save £77, on average, by shopping around and switching insurers.

Why is my car insurance still expensive?

There could be a few reasons behind this.

Primarily, renewal prices aren’t reflecting recent pricing trends. 1 in 2 (50%) UK drivers received a more expensive renewal price, of around £81, on average. 

So, it's always worth looking around for a better deal. Even if your renewal isn't as high as expected, or is only slightly less than the previous year, you could still save money by comparing quotes.

Insurance companies consider a mix of personal and external factors when deciding how much you pay. Even if average car insurance costs are down, your personal situation or wider trends might still drive your price up.

There are other factors that could explain why your car insurance is more expensive than anticipated, such as:

Personal reasons

Premiums may be falling overall, but your personal circumstances still have a bearing on the prices you're quoted. Here are some factors that might affect your premium:

Previous claims: If you claim on your insurance, even if it wasn’t your fault, it can lead to higher premiums when your policy is up for renewal.

Change in job title: Your occupation can have a bearing on your car insurance cost. Some jobs are seen as riskier than others, especially if you commute to work by driving your car.

Different car groups: Upgraded your wheels? Cars in higher insurance groups tend to be pricier to cover.

Other external reasons

There are other external reasons out of your control that can cause car insurance prices to rise across the board. These include:

Inflation: The rise of inflation in the UK has seen the cost of parts and labour soar. In turn, it costs insurers more to pay to repair or replace vehicles. As newer cars adopt advanced technology and equipment, it's more complicated to repair and replace certain components.

Car thefts: A rise in car thefts can lead to higher premiums for everyone, even if you’ve never been affected.

How have car insurance prices changed over the past few years?

As we discussed earlier, the Covid-19 pandemic keep prices in check as fewer drivers took to the road. But prices rose significantly as more people got behind the wheel when restrictions were lifted. This coincided with the cost of living crisis, so costs began to soar in 2022 and 2023.

Prices continued to climb during this time, and the average cost of car insurance in the UK reached a record of £995 in Q4 of 2023. Since that point, costs have continually declined on a quarter-by-quarter basis.

 

Male drivers pay more than women

While car insurance costs continue to fall for all drivers regardless of gender, men generally pay more. Male drivers pay £833, on average. This is down 17% (£168) compared to March last year. Whereas women pay £684, on average. This has dropped by 19% (£152) compared to March 2024.

The EU Gender Directive means insurers can't set prices based on gender. But, on average, men pay more due to other risk factors still coming into play. Generally speaking, men often drive more expensive cars, which leads to higher claims. They also tend to have more motoring convictions.

These factors contribute to a narrowing £149 gender gap in car insurance costs between men and women, on average. 

Respite for younger drivers

According to the latest car insurance price index by Confused.com, young drivers could be paying as much as 23% less annually. This offers much needed respite for drivers aged 17-20, who still pay significantly more for car insurance premiums than any other age group.

18-year-olds now pay £711 (23%) less compared to March last year. This means drivers of this age are now paying £2,434, on average. This is the lowest prices have been for drivers of this age in almost 2 years.

Whereas 17-year-olds are also benefitting from significant savings, with prices now £661 (23%) cheaper than last year. This means drivers of this age are now paying £2,258, on average.

These savings are down to a number of reasons. First off, prices are dropping for all drivers generally. Fewer claims mean less pay outs, that means insurers can adjust their premiums. Also, newer cars are adopting more safety technology, which mean they're less likely to be involved in accidents or at a lower risk of theft.

Crucially, key data from Confused.com shows that younger drivers are also taking additional measures to reduce their insurance costs. In particular, there has been a significant shift between 2020 and 2024 in the number of drivers opting for telematics policies.

These devices track a driver’s habits and driving patterns to calculate a more accurate price. In short, safer driving brings down the cost of car insurance.

According to Confused.com data, there has been a 21 percentage point uplift in sales of telematics policies for drivers aged 17-20 between 2020 and 2024.

The data also points to younger drivers opting for cheaper cars, which can be cheaper to insure. Overall, 68% of drivers aged 17-20 insured a car valued under £5,000 in 2024. 

Other costs still high

The overall cost of running a car is a double-edged sword, despite falling car insurance premiums.

In general, the cost of repairs and parts are increasing as vehicles become more technologically advanced. 

The cost of fuel has remained fairly stable over the past 6 months, but drivers could soon start to see prices fall. If you want to find the cheapest petrol or diesel prices near to you, you can use our fuel price tool.

Petrol now costs £1.37 per litre, and diesel costs £1.44, on average (prices correct as of 21 March 2025).

Getting cheaper car insurance

If you're looking for tips for cheaper car insurance, here are some ways that may help bring the cost down:

Pay annually: Paying for your policy in one go rather than monthly can often work out cheaper. This is because you'll avoid paying interest over monthly instalments. 

Black box policy: A telematics policy could lower your costs, especially if you’re a careful driver. Young drivers might benefit from this type of insurance.

Look at the cover type: Check whether the level of cover you’ve chosen suits your needs. Sometimes, comprehensive cover can be better value than third-party only.

Shop around: Using price comparison websites like Confused.com before your renewal can help ensure you get the best deal possible.

Increase your voluntary excess and build up a no-claims bonus: Increasing your voluntary excess means you're willing to contribute more money in the event of a claim. You build up your no-claims bonus each year you drive without claiming on your insurance policy.

What our motor insurance expert says

“We’re starting to see a consistent trend of prices decreasing, and this is great news for drivers! This could be because insurers are paying out fewer claims than before. Paying out on less claims means more savings to pass on to customers. But this doesn’t mean that prices won’t start to increase again in the future, especially if claims start to increase.

“In particular, younger drivers are seeing the biggest savings when shopping around. Just over 12 months ago, prices increased by as much as 98% for some. So these latest drops could be great for young drivers buying insurance. It’s interesting to see that young drivers have been shopping around for their insurance, with more drivers looking to buy telematics, or basic level policies. These could work out as a cheaper option, so we’d always encourage younger drivers to compare different policy types to see what works best for them.

“But staying on top of your insurance is key to getting the best price. You’ll often see a better price if you shop around at renewal time. Even if your renewal price from your insurer is cheaper than last year, it’s likely there will be another insurer out there offering a better price. Doing this ahead of time can save you even more too. Our data shows that if you shop around about 3 weeks before your policy is due to renew, you could benefit from the biggest savings. Leaving it too late, or simply accepting your insurer's renewal price could mean you lose out on great savings.”

Rhydian Jones Commercial Director & Motoring Expert

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