Average price of car insurance rockets to more than £750

David Ross, Editor
Thu, 20 Jul 2023

Car insurance prices in the UK have seen a staggering increase, making it the third most expensive household bill, according to new from Confused.com.

The latest car insurance price index reveals that motorists are now paying an average of £776 for their car insurance, following an 18% increase in prices over the past three months.

The data, based on over six million quotes in the second quarter of 2023, indicates that prices have risen by £222 (40%) compared to 12 months ago, marking the biggest price increase on record.

The average premium is now 49% more expensive than it was two years ago. Only 9% of UK drivers had a cheaper renewal price in the last quarter, debunking the myth that regulations implemented by the Financial Conduct Authority in January 2021 would prevent more expensive renewals.

Almost 2 in 3 (59%) drivers saw their prices increase by an average of £52, despite having no driving convictions or a one-year no-claims bonus.

The huge surge in prices has been put down to an increase in the cost of claims. Rising inflation rates have driven up the cost of repairs and maintenance, which in the event of a claim, is covered by the insurer.

This is especially true for newer cars and many used cars that are in high demand. In fact, the Association for British Insurers (ABI) reported a 33% uplift in the cost of vehicle repairs last quarter.

Due to a shortage of new cars, used cars are retaining their value better, resulting in higher costs for insurers to cover write-offs or total losses.

Additionally, the increased value of new cars, especially electric cars, thanks to expensive standard features and options, is leading to higher payouts for insurers when replacing these vehicles.

Of course, the average cost of car insurance varies based on factors such as gender, location, and age. Male drivers pay an average premium of £827, while female drivers pay £690.

Drivers in outer London experienced a 42% price increase, bringing the average premium in the region to £1003, the first time it has exceeded £1000. Inner London remains the most expensive region, with an average premium of £1257.

Ask HJ

Why has my car insurance increased so much this year?

To insure our Fiat 500C last year was £209 but this year the lowest quote anywhere is £354. That's with no changes or claims. Please can you explain this 70% increase?

You're not alone - nearly all motorists are seeing significant increases to their insurance renewel. According to the Association of British Insurers (ABI) premiums continue to rise due to several factors. Insurers have reported increasing costs, including energy inflation impacting repair expenses, a nearly 16% rise in average paint and material costs and a 30% increase in courtesy car costs for repairers. Sadly that cost is passed onto us - the motorist. The average price of a renewel for 2023 has gone up by £70 with the average price of car insurance now at £478 in the first quarter of 2023. So even if you haven't claimed and your NCB has increased, your insurance will still go up. We'd suggest keep looking on comparison sites for the best deal, but it's likely to still be considerably more than you paid last year.

Answered by David Ross

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