After several years of rising motor insurance costs, UK drivers are finally seeing a notable drop in car insurance premiums – but the national averages don’t tell the whole story.
While millions of drivers are paying less than they were two years ago, others have seen their renewal quotes rise. Whether you’re in the good news camp or not depends on your individual circumstances.
How far have prices fallen?
In December 2023, at the end of a post-pandemic period that brought high inflation and supply chain strain, Compare the Market reports that the average annual car insurance payment was £950. Two years later, the average annual cost has dropped to £607 – a 36% fall since 2023 and a 16% drop year-on-year.
Confused.com’s Car Insurance Price Index paints a similar picture, but with a less dramatic fall in average costs. As of November 2025, the company reports that the average annual car insurance cost is £726, which is 13% cheaper than twelve months prior – an £111 saving – and the cheapest average price the index has recorded since March 2023.
The rate at which insurance costs are falling isn’t as dramatic as the rate at which they rose. Prices for new quotes have been declining since all-time highs were reached in late 2023 – almost £1,000 a year according to the Confused.com index – but the fall has been more gradual, and insurance costs are still notably more expensive than they were before prices started to spike in early-to-mid 2023.
Why did my car insurance go up at renewal?
While car insurance is getting cheaper when you look at the UK as a whole, some drivers saw their renewal quotes rise in the last year. Insurers don’t base your quote on the national average. They look at your individual details and external factors out of your control, which is why your costs can rise even while the average falls.
If you’ve received a higher renewal quote, you might assume the insurer is simply betting you won’t look elsewhere. That’s unlikely, because it’s actually illegal. Since January 2022, insurers in the UK are prohibited from charging renewing customers more than they would charge an equivalent new customer.
It’s more likely that your renewal quote rose because:
- You’ve changed your car, and your new vehicle sits in a higher insurance group
- Previous claims – even those where you weren’t at fault – push your premium up
- You’ve changed your occupation, and your insurer views that role as higher risk
- Repair costs for your car’s technology are still rising
- Car thefts have increased in your area
Don’t simply renew without shopping around – it always helps to look. Confused.com reports that, among drivers quoted a higher price at renewal, 47% switched insurers and saved £87 on average.
British drivers are also cutting costs in other ways. A Financial Conduct Authority survey of 18,000 adults in 2024 found that 15% of British motorists reduced the level of cover on their policy in the period between May 2023 and May 2024. Reducing cover to save money carries its own risks – worth bearing in mind before making that decision.
What’s driving the decline?
Easing inflation
During and after the Covid pandemic, used car prices surged by over 30% according to the Office for National Statistics. Spare parts were also in short supply due to global semiconductor shortages, later complicated by uncertainty surrounding US tariffs.
Thatcham Research reported that newer cars became more expensive to fix due to the rollout of more advanced driver assistance systems, with repair costs rising by over 30% between 2021 and 2023.
Insurers had to price for significantly higher claim payouts – particularly for total loss claims and complex repairs. Now, in 2026:
- Used car prices have stabilised
- Supply chains have normalised
- Parts availability has improved
- Repair costs, while still rising, are rising more slowly
With vehicle repair and replacement costs no longer rising at pandemic-era rates, insurers are walking back the emergency pricing adjustments made during the height of post-pandemic inflation.
Market competition
Now that inflation is returning to more normal levels and supply chains are back up to speed, insurers are more willing to compete for your business on comparison websites such as Compare the Market, MoneySuperMarket and Confused.com.
Fewer claims or lower-cost claims
Compare the Market suggests that the fall in prices could partly be due to a shrinking number of insurance claims, with personal injury claims associated with vehicle accidents falling to record lows between July and September 2025.
The UK government’s Civil Liability Act and Whiplash Reform Programme also came into force in May 2021, reducing the value of smaller injury payouts and creating more predictable claims modelling. That may have also contributed to falling premiums, as the government intended.
The Association of British Insurers reports that pressures remain high – its members paid out over £3 billion in car insurance claims in just the third quarter of 2025 (July to September).
Who benefits most?
By age
All age groups have benefited from falling premiums over the past two years, but some have seen bigger savings than others.
Compare the Market reports that the youngest age group – 16 to 24-year-olds – has seen annual insurance costs fall by 34% since late 2023, the biggest percentage drop of any age group.
Despite the fall, young drivers still pay far more than older age groups do, due to the risk insurers associate with younger, less-experienced drivers. The Association of British Insurers reports that this age group is involved in a disproportionate number of fatal and serious injury collisions.
By gender
Insurance providers can’t discriminate based on gender – that’s due to the EU Gender Directive, which came into force in 2012. But men on average pay more for car insurance in the UK, as insurers assess them as carrying a higher risk profile than women on average.
According to Confused.com, prices for both men’s and women’s quotes fell at essentially the same rate from November 2024 to November 2025, so the gap between them remains. As of late 2025, men pay £781 annually on average, while women pay £634.
By region
Car insurance premiums have generally fallen across the UK, but drivers in some regions are seeing larger drops than others – partly because those regions started from very different price levels.
Compare the Market data shows that Greater London has seen one of the sharpest reductions since December 2023, down 37%, but this needs to be viewed in context. London was also one of the regions that experienced the most dramatic premium inflation during the post-Covid cost surge.
London still remains one of the most expensive places to insure a car, with average premiums around £956, while Wales and south-west England are the cheapest regions at £498 and £468 respectively as of December 2025.
The difference in premiums by region reflects long-standing risk factors – including population density, traffic congestion, crime rates and claims frequency – that insurers use when pricing policies.
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