The latest data shows that the average cost of car insurance has increased for the first time in the past three years. Drivers are now paying an average of £719 annually for their motor cover, marking an £8 rise over the last three months. Although prices are still £38 cheaper compared to a year ago, the recent trend of declining premiums seems to be reversing.
Insurers are facing higher costs, with the average value of insurance claims surging by 42% since 2020. Nearly half of drivers have experienced higher renewal prices in the last quarter, indicating that motorists might face further premium hikes in the future, according to a warning from Confused.com.
The research, based on over six million car insurance quotes, comes from the latest car insurance price index by Confused.com and WTW. Motor premiums had been decreasing since the beginning of 2023 following a period of sharp increases linked to the economic impact of the Covid crisis.
Despite the decreasing number of claims, the cost of claims per customer has been rising. This upward trend likely influences insurers to adjust their pricing to account for the increased risk of higher payouts. The average payout per claim has spiked by 42% from £3,842 to £5,464 between 2020 and 2025, while the number of claims has decreased by 59% during the same period.
Matt Crole-Rees, a motoring expert at Confused.com car insurance, mentioned that although drivers have enjoyed lower car insurance prices, recent months have seen a slight increase, possibly leading to higher renewals. He emphasized the importance of considering risk and claims in calculating insurance prices, noting that shopping around and renewing early could result in significant savings of up to 53%.
Opting for Daily Mirror as a ‘Preferred Source’ on Google News allows for easy access to valued news content.
