How much does car insurance cost?

When rising costs hit everything from your weekly shop to petrol, the last thing you need is for car insurance to go up.

Average car insurance prices stood at £564 in 2025 – down £58 on the same period in 2024, according to the Association of British Insurers (ABI)¹ – offering some relief to drivers.

Even if your car insurance premiums fell, you’ll still want to manage the costs. We explain why car insurance prices rise and fall, and what you can do to pay less.

EASY AS HACK

11 ways to reduce the price of your car insurance:

1. Shop around every year
2. Build up your no-claims bonus
3. Increase your voluntary excess
4. Only pay for the cover you need
5. Change the insurance cover you have
6. Increase nighttime parking security
7. Park in a private driveway or garage
8. Pay annually rather than monthly

9. Add telematics (a black box)

10. Choose a less powerful car

11. Don’t overestimate your annual mileage

HOW MUCH IS CAR INSURANCE IN THE UK?

The average annual cost of car insurance in the UK fell to £564 in 2025, following a steady decline through most of the year. Prices dropped consistently from early to mid-year, before ticking up slightly towards the end:

• The year started at £581.
• Prices then fell to £562.
• They dropped again to £551, the lowest point of the year.
• By the end of the year, they edged back up slightly to £559.

WHAT FACTORS AFFECT THE COST OF CAR INSURANCE?

Car insurance premiums in the UK are primarily affected by motor claims costs, which totalled £7.5 billion in 2025.¹ The price of insurance rises as these costs increase, driven by factors such as more expensive car repairs and insurance fraud.²

When insurance companies set premiums for car insurance policies, they’ll weigh up various risk factors using their data and risk modelling. ³ The risks they base your insurance premium on include:

• Policy type – fully comprehensive insurance typically costs more than third-party fire and theft or third-party insurance.
• Age – young and new drivers may find car insurance more expensive because insurers perceive them as a higher risk than older drivers.
• Occupation – if you use your car for work, you may spend more time on the road, which means you’re at a higher risk of an accident.
• Location – the level of crime in densely populated areas may make them riskier places to keep a car than rural settings.
• Mileage – statistically, the more miles you do, the more likely you’ll be in an accident, which your premiums will reflect.
• Make and model of your car – premium vehicles with bigger engines and more modifications will cost more to repair, so insurance costs are higher. Electric cars can be cheaper to maintain but more to insure due to higher accident repair and maintenance costs. Read our guide to electric car buying.
• No claims discount – if you don’t make a policy claim for a year, you could earn a discount on your car insurance costs, known as a no claims discount or bonus.
• Driving history – points on your licence for a driving offence, such as a speeding ticket, could mean higher premiums.
• Voluntary excess – choosing a voluntary amount to pay towards the cost of a claim can reduce the cost of insurance.
• Where you park your car at night – generally, you’re less likely to have your car stolen or damaged if you park it securely in a garage overnight. As your chances of claiming are less, your premium will typically be less.

HOW TO REDUCE THE COST OF CAR INSURANCE?

You can reduce your car insurance costs in various ways:

• Shop around every year – if you find a better car insurance price, call your current insurer at renewal. Ask them if they can match the premium (ensuring that the policy still covers everything you need).⁴ You can go directly to an insurance company, such as Ageas, or through an insurance broker.
• Build up your no-claims bonus – these vary per insurer, so again, it’s worth shopping around for a suitable deal.⁵
• Increase your voluntary excess – agreeing to pay part of a claim yourself may reduce your auto insurance premiums, but you must be able to afford to pay it when the time comes.⁵
• Only pay for the cover you need – you can keep car insurance prices down by limiting cover to domestic use,⁷ rather than business use or by reducing the add-ons, such as courtesy car cover.³
• Think about the type of insurance cover you have – third-party fire and theft may cost less than fully comprehensive cover, but the way car insurance works means it’s not always the case. It’s worth checking the available options.
• Increase the security of your vehicle when parked at night by adding alarms or immobilisers.
• Park in a secure location - a garage or private driveway is more secure than street parking and can affect the price you pay.
• Pay annually rather than monthly – this means the insurer receives the funds straightaway. They can then invest them to generate enough returns to pay those who need help and keep premiums lower.⁵
• Consider telematics – sometimes called ‘black box insurance’ – especially for young, less experienced drivers. Telematics monitor how you drive by measuring factors such as the distance you travel and how often you brake, and you can use the data to improve your driving.⁵
• Choose your car carefully – insurers use Thatcham Research assessment scores or their own risk classification system to quantify a vehicle’s risk, including its power.⁵ Cars with less powerful engines are often cheaper to insure.⁶ Bear in mind that adding modifications that improve your vehicle’s performance can also result in higher premiums.
• Don’t overestimate your annual mileage; you could end up paying more for your insurance than you need to.⁷

WHEN IS THE BEST TIME TO BUY CAR INSURANCE?

The best time to buy car insurance is a couple of weeks before renewal, rather than waiting until it is due (when it often costs more).⁵  Check your policy documents and note the date for renewal in your diary to give you time to shop around.

Since 2022, renewing customers no longer pay higher car insurance prices than new customers.⁷

GET A CAR INSURANCE QUOTE

Find the right car insurance at the right price with Ageas car insurance.

FAQs 

IS IT CHEAPER TO PAY FOR CAR INSURANCE MONTHLY OR ANNUALLY?

Typically, it’s cheaper to pay annually rather than car insurance per month. It doesn’t reduce the premium, but you won’t pay instalment interest. Read our car insurance terms and conditions.

IS CAR INSURANCE CHEAPER FOR OVER 50s?

• Older drivers are generally lower risk than young drivers aged 17 to 24, but the price of insurance varies for each person based on factors like your driving history, no claims bonus and your driving habits.
• If you’re over 70, the risk and premiums rise again.
• Older drivers may find their insurance is cheaper if they have more years of driving experience and a high no-claims bonus.

WHAT TYPE OF CAR IS CHEAPEST TO INSURE?

If your insurance providers think you may have been careless with your vehicle, there is a possibility they may not pay out.

Sources 

[1] https://www.abi.org.uk/news/news-articles/2026/2/11.9-billion-paid-out-in-2025-to-support-motorists-across-2.5-million-claims/
[2] https://www.abi.org.uk/products-and-issues/choosing-the-right-insurance/motor-insurance/insurance-pricing-faqs/
[3] https://assets.publishing.service.gov.uk/media/6954d41b6a4ea67a402a835c/motor-insurance-taskforce-final-report.pdf
[4] https://www.abi.org.uk/products-and-issues/choosing-the-right-insurance/motor-insurance/how-to-cut-the-cost-of-motor-insurance/
[5] https://www.thatcham.org/pf/group-rating/
[6] https://www.abi.org.uk/products-and-issues/choosing-the-right-insurance/motor-insurance/insurance-pricing-faqs/
[7] https://www.abi.org.uk/products-and-issues/topics-and-issues/important-rule-changes-to-the-pricing-of-home-and-motor-insurance/