The latest data reveals that the average cost of car insurance has increased for the first time in three years. Drivers are now paying an average of £719 annually for their motor cover, marking an £8 rise over the past three months. While still £38 cheaper compared to a year ago, the trend of declining premiums may be shifting.
Insurers are facing escalating costs, with the average value of insurance claims surging by 42% since 2020. Nearly half of drivers have experienced higher renewal prices recently, indicating potential further increases in cover costs. The findings stem from the most recent car insurance price index by Confused.com and WTW, analyzing over six million car insurance quotes.
Although motor premiums have been decreasing since early 2023 following steep hikes during the Covid crisis aftermath, the research suggests a shift as claim costs have been on the rise. The average payout per claim has spiked by 42% from 2020 to 2025, reaching £5,464. Despite a 59% decrease in claims made during this period, the remaining claims are significantly more expensive to address.
Matt Crole-Rees, a motoring expert at Confused.com car insurance, highlighted the recent uptick in prices, attributing it to increased claims costs. He advised drivers to proactively seek out better deals during renewal, emphasizing the potential savings of up to 53% by obtaining quotes 28 days before the renewal date. Being proactive and conducting early comparisons can lead to substantial cost savings in car insurance.