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What's happening to car insurance premiums?
Cost of motor cover rose for the first time in a year, says ABI data
Matthew is an award-winning journalist, specialising in savings, tax and insurance.
The average cost of car insurance rose for the first time in a year, the latest figures from the Association of British Insurers (ABI) show.
The data, published every three months, shows that the average premium from October to December 2025 was £559. That's up £8 on the previous quarter but £62 less than the same time period in 2024.
Read on to find out more about the current cost of car insurance and for tips on how to pay less.
What's happening to car insurance prices?
The ABI's latest figures show that average car insurance premiums increased for the first time since the final quarter of 2024, when the cost of motor cover climbed to £621.
However, premiums are still cheaper now than a couple of years ago. The average cost of an annual policy was £635 at the beginning of 2023.
Published every three months, the ABI's data gives the most accurate picture of the market, as it's based on actual prices paid by drivers (as opposed to quotes), and covers both new customers and those renewing existing policies.
The chart shows how the average cost of a car insurance premium has changed since January 2022:
Source: Association of British Insurers (ABI)
Comparison sites also publish data, but their figures only reflect quotes given to customers searching for car insurance.
The latest figures from GoCompare show that the average cost of an annual car insurance policy dropped to £400 between July and September 2025. That's 3.5% lower than the previous quarter and the lowest since 2023.
- Find out more: best car insurance companies
Why is the cost of car insurance still high?
Claims costs are blamed for the high price customers are still paying to insure their vehicles. The ABI's latest figures show that insurers paid out £2.9bn in motor insurance claims between October and December 2025.
An increase in repair costs is putting particular pressure on providers. The cost of repairing vehicles totalled £7.5bn in 2025 and accounted for 63% of the £11.9bn paid out by insurers for vehicle damage last year.
The ABI says that's largely down to the fact that modern components such as integrated sensors and cameras are making the job of fixing vehicles more specialised, time-intensive and costly.
Check you're getting a great deal and search for a new car insurance policy using the service provided by Confused.com. Get a quote now
What affects premium prices?
Age and driving experience both affect premium prices.
The younger you are, the higher the cost of insuring a vehicle. That's because drivers who haven't been on the road for long are considered more likely to be involved in an accident, so providers raise their premiums to account for that increased risk.
The price of insuring your car gradually decreases as you get older and spend more time on the road.
You'd expect to see cover jump again once you reach retirement age, and insurers do take increased age-related risks into account. But when we looked at GoCompare data from the first three months of 2025, we found premiums don't increase dramatically until a driver is well into their 80s.
Go Compare's latest report shows where you live can also make a difference.
Those living in Greater London paid the most for their car insurance in the third quarter of this year. The average annual cost for a driver in the capital was £575. The cheapest car insurance quotes are in Wales, with an annual policy coming in on average at £324 a year. That's 84% cheaper than for drivers in London.
The comparison site says this price difference is usually because insurers consider drivers who live in and around the capital to drive in heavier traffic and to be more at risk of having their car damaged or stolen than drivers who live in Wales.
How much could you save by switching?
You can potentially make big savings by shopping around for a better deal.
A good place to start is by checking out price comparison sites, which allow you to view multiple car insurance quotes at a glance. The main ones for insurance are Compare the Market, Confused.com, GoCompare and MoneySuperMarket.
But remember, not all insurers are on price comparison websites: Which? Recommended motor insurance providers Direct Line and NFU Mutual are examples of this.
Other ways to keep costs down
Here are a few simple ways you can reduce the cost of car insurance:
- Go annual Paying for a whole year in one go instead of monthly could save you hundreds of pounds.
- Renew early You'll often get a cheaper price if you renew your cover a few weeks (rather than a few days) in advance of the policy's end date.
- Keep mileage down Try to limit the miles you clock up over the year to avoid being hit with a higher premium.
- Tweak your job title Your occupation can also impact your premium. One trick to get around this – without lying – is to try to tweak your job title. For example, instead of 'barber', try saying 'hairdresser' or 'hair stylist'.
- Haggle If you don't want to switch to another insurer, you might be able to get the price down by haggling.
Find out more: how to find cheap car insurance
This story is regularly updated with the latest figures from ABI and comparison sites, including Confused and Compare the Market.
