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How much does car insurance cost in the UK?

How much does car insurance cost in the UK?
How much does car insurance cost in the UK?

If you’ve had to renew your car insurance recently, the likelihood is it’s become more expensive.

The average comprehensive car insurance premium cost £635 in the first quarter of 2024, according to the Association of British Insurers (ABI), with factors such as hi-tech cars being more costly to fix and an increase in older drivers being among the reasons behind the rises.

But there are a large number of factors that make up a car insurance quote, with the price depending on how likely your car insurer thinks you will claim. Everything from your driving record, vehicle type and your location can feed into this figure.

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Here, Telegraph Money sets out everything that affects the cost of car insurance premiums, and what you should consider when buying a policy.

Factors that determine car insurance cost

Car insurers consider multiple risk factors when calculating your premium and, essentially, how “risky” you are. Some of these, like your age, are outside your control, while others – like vehicle type and model – could be worth considering if you’re keen to reduce your insurance costs.

Your driving record

Your driving record shows insurers how long you’ve been driving and whether you have a history of accidents, claims or points on your licence.

Those with limited driving experience or a history of claims or motoring convictions will be considered riskier drivers, and will likely pay more for their premiums.

On the other hand, someone with a clean driving licence and several years’ experience under their belt will typically pay less.

With this in mind, it’s important to be as conscientious a driver as possible – carelessly racking up points really can cost you the next time you need to renew your policy.

Age and gender

Car insurance tends to be more expensive for those at either end of the age spectrum – specifically those under the age of 25, and over the age of 80. For younger drivers, inexperience makes them statistically more likely to be involved in an accident. As they get older and gain more experience, premiums start to fall.

According to the consumer group Which?, car insurance should be cheapest for those in their 50s and 60s – but costs then begin to rise again as you get older and it can be hard to find an insurer to take you on at all. That’s because insurers tend to consider those aged 80 and above to be at bigger risk of collisions, and some may require confirmation from your GP that you are okay to drive.

When it comes to gender, insurance providers can no longer consider gender when calculating premiums – thanks to the introduction of the Gender Directive in 2012. However, data from insurers such as Admiral shows female drivers tend to pay less for premiums than male drivers, as they often drive safer cars and are involved in fewer accidents.

Vehicle type and model

The type of vehicle you want to insure can have a big impact on your insurance costs. Broadly speaking, the more expensive the vehicle, the more expensive the policy.

Insurers decide this by categorising all cars into one of 50 insurance groups, based on factors such as engine size, repair costs, safety features and hi-tech features. Vehicles in lower groups – which will likely be older, with smaller engines and without any specialist parts – are typically cheaper to insure, while those in higher groups are more expensive.

Generally, the more powerful and luxurious the car, the higher the group it will be in.

Location

When calculating your premium, insurers will not only consider where your car is parked and stored, but also the area you’re driving around in general. Factors such as the driving behaviour in your area, how busy and built up it is, the crime rate, and the average number of claims are all taken into account.

As for where you keep your car, you’ll usually pay less if you park your car in the garage or on a private driveway compared to someone who parks their vehicle on the street.

Understanding car insurance premiums

How you pay for your car insurance premiums and the level of excess you choose can also have an impact on your overall bill.

Annual vs monthly payments

Paying for your car insurance in one annual lump sum will be cheaper than paying in monthly instalments.

Choosing to pay monthly means you’ll enter into a credit agreement with your insurer. You’ll be charged interest on your payments and pay more overall. You’ll also be credit-checked when you apply.

If you can’t afford to pay in one go, consider using a 0pc purchase credit card to spread the cost over 12 months or less, interest-free.

Excess and deductibles

The excess is the amount you must pay towards the cost of a car insurance claim, if you need to make one. There are two types of excess:

  • Compulsory excess: this is set by your insurer and can’t be changed

  • Voluntary excess: this is an optional amount you can agree to pay on top.

Choosing a higher voluntary excess will lower your premiums. But you must make sure it’s affordable, as you’ll need to pay it in addition to the compulsory excess if you claim.

Tips to save on car insurance

There are several strategies you can use to keep your car insurance costs to a minimum:

Comparison shopping

Since the banning of the “loyalty penalty”, insurers are no longer allowed to offer preferential prices to new customers. But it still pays to shop around using a comparison site at renewal to see if you can find a cheaper deal by switching insurers.  

Discounts and bundling

If you’re insuring more than one car, you might save money by choosing a multi-car insurance policy. There’s usually a discount for each car added to the policy.

Some insurers take this a step further and offer discounts to those who bundle their car and home insurance together. However, there’s no guarantee this will always save you money. Comparing the cost against standalone quotes for the same policies will help you find the best deal.

Driving habits and mileage

If you drive fairly infrequently, it’s important not to overestimate your annual mileage when you apply for car insurance. The fewer miles driven, the lower the chance of being in an accident, which means your premiums will be reduced.

But be careful not to underestimate your mileage either, as this could invalidate your policy.

Another option is a pay-as-you-go car insurance policy. This uses a telematics device to track your mileage and charges you based on how many miles you drive. It also tracks your driving habits which means you could be rewarded with lower premiums if you drive safely.

Additional factors to consider

Policy coverage options

Fully comprehensive car insurance is the highest level of coverage you can buy, so you might naturally assume it’s the most expensive. But this isn’t always the case.

Drivers with higher risk profiles (such as young drivers) tend to choose third-party cover, but insurers have cottoned on to this trick and have pushed up the cost of third-party premiums as a result. This means comprehensive car insurance often works out to be cheaper.

Including optional add-ons such as breakdown cover or motor legal protection will give you more cover, but cost you more, so you should choose carefully.

Impact of claims history

Claims on your car insurance won’t affect your premiums immediately, but you are likely to pay more at renewal.

Insurers will usually ask about your claims history for the past five years, though some might ask for seven. Claims made before this time won’t affect the price of your car insurance.

How to navigate the car insurance market

When comparing car insurance quotes, it’s important to keep the following in mind:

Choosing the right provider

Shop around and compare the levels of coverage available with each provider as well as the cost. Look for the right balance between adequate cover and the best price.

Policy customisation

Consider whether you want to include any add-ons in your policy such as cover for breakdowns, lost keys, legal fees and driving abroad.

To keep costs down, only select the ones you’re likely to need.

Reviewing and updating coverage regularly

Regularly review your policy to be sure it still gives you the coverage you want. You’ll need to do this at renewal, but you should let your insurer know as soon as possible if you’ve:

  • Moved home

  • Changed occupation

  • Been in an accident or had a motoring conviction

  • Changed or modified the car

  • Changed the main driver or added an additional driver

Depending on what’s changed, your premiums might be adjusted. You might also pay an admin fee.

FAQs about car insurance pricing

  • How much is car insurance on average in the UK?

Car insurance in the UK costs an average of £635 a year, according to ABI figures. However, the amount you pay will depend on several factors, including your driving history and age.

  • How much does it cost to insure a new driver?

It can cost an average of £1,791.43 to insure a new driver with no driving history, according to figures from MoneySuperMarket. But exact costs will vary, depending on the type of car you drive and where you live.

  • Who normally has the cheapest car insurance?

Older, more experienced drivers will generally have the cheapest car insurance, particularly if they have no claims history and no motoring convictions.