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What's happening to car insurance premiums?
Cost of car insurance fell £56 over the year, says ABI data
The average cost of car insurance dropped for the third quarter in a row, the latest figures from the Association of British Insurers (ABI) show.
The data, published every three months, shows that the average premium from July to September was £551. This is down £13 on the previous quarter (April-June), which in turn was £25 less than at the beginning of the year.
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 have fallen for three consecutive quarters, and are £56 lower than they were last year.
However, premiums are still more expensive now than a couple of years ago. The average cost of an annual policy was £561 in July to September 2023 and £635 in the first three months of last year.
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.
While this and other differences in methodology tend to result in different averages from those published by the ABI, the general trends are similar. Confused.com, GoCompare and Quotezone all show that premiums have dropped compared with late 2024.
- Find out more: best car insurance companies
Why is the cost of car insurance still so high?
Record 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 £3bn in motor insurance claims between July and September 2025.
An increase in repair costs is putting particular pressure on providers. According to the ABI, the costs of repairing vehicles totalled £1.9bn and accounted for 64% of the total claims figure.
The ABI says that's largely down to the fact that modern components such as integrated sensors, and smart systems are making the job of fixing vehicles more specialised, time-intensive and costly.
The expensive tech now used in many cars are also an attractive target for thieves. The cost of theft-related claims totalled £142m in the third quarter of 2025.
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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 that mileage affects the cost of insurance, too. Those driving up to 6,000 miles pay an average of £444 for their premiums, compared with £488 paid by those driving up to 10,000 miles.
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.
