How Much Is Car Insurance? Your Guide to Costs, Factors, and How to Save Money
If you want to drive in the UK, you need car insurance. It’s illegal to get behind the wheel without it. But how much is car insurance on average? What affects the price you pay? And how can you get a cheaper deal?
Here, we answer all of these questions and more.
The average cost of car insurance in the UK
The amount you pay for car insurance is called the “premium”. Most insurers will give you an annual quote, but you can usually choose to pay your car insurance premium in monthly instalments — although this can make the overall cost more expensive (more on this below).
According to research by the Association of British Insurers (ABI), the average annual premium paid (not quoted) for car insurance in the UK was £470 in the final quarter of 2022.
This was up 8% on the previous quarter and 7% higher than Q4 2021.
Is it cheaper to pay for car insurance monthly or annually?
Paying for your insurance annually in one lump sum is almost always cheaper.
That’s because, if you choose to make monthly payments, you enter into a credit agreement with the insurer. As a result, you have to pay interest on top of your insurance payments, and this can drive up the cost.
4 factors that affect car insurance cost
When you apply for car insurance, the quote you receive will be tailored to you, your car, and where you live. These factors, along with the type of coverage you choose, will determine the car insurance premium you’ll pay.
Let’s take a look at these things in a little more detail. Insurers use the following information to figure out how much of a risk you are and how likely they’d have to pay out on your policy:
1. Driver factors (you)
The main thing most insurance companies want to know is your age — and with good reason.
Younger drivers tend to be less experienced and, therefore, at higher risk of having an accident. As you get older and gain experience behind the wheel, your premiums go down.
However, reaction times can become slower the older we get. So, once you hit your 60s, you’ll notice that premiums start to rise again to reflect this risk.
Average UK car insurance cost in 2022, by age:Age groupCost (£)20 years old£85125 years old£71935 years old£63945 years old£57555 years old£46865 years old£49175 years old£752
Source: Statista.com
Additional personal details that affect car insurance prices
Along with your age, insurers will also ask about:
Your annual mileage: In short, the more you drive, the higher the chances you’ll need to make a claim, and the more you’ll need to pay for insurance to offset this risk.
Your occupation: Some job titles attract higher premiums than others. Research by MotoringResearch.com found that drivers, chefs, hairdressers, and bar staff often pay more for car insurance, while mechanics, designers, administrators, and engineers pay less.
Your marital status: It might seem a bit outdated, but several studies suggest that married people are more risk-averse and less likely to make a claim than single people. If you’re single or cohabiting (but haven’t tied the knot), you may end up paying more.
How long you’ve been driving: Not every 25-year-old has been driving for eight years. If you’re a late bloomer, your lack of experience will be taken into account.
Your driving history: If you’ve had an accident or been pulled over for careless driving, you’ll often be seen as a riskier driver straight off the bat, increasing the cost of your premium.
2. Vehicle factors (your car)
Once the insurer knows more about you, they’ll ask about the car you’re insuring. Various factors are considered, including:
The age and value of the car: Older, less valuable cars can be cheaper to insure than newer, more expensive ones. Newer cars can also be targets for car thieves, making them riskier to cover.
The make and model of the car: Insurers place cars into one of 50 groups based on features, performance capabilities, how easy they are to repair, and the cost of replacement parts. A group 1 vehicle (for example, a Skoda Fabia) would be the cheapest to insure, while a group 50 car (like a Jaguar XE) would be the most expensive.
The safety and security features of the car: Features that make your car safer to drive, like rearview cameras, anti-lock brakes, and lane departure warnings, could minimise the risk of accidents and reduce the cost of your car insurance. Meanwhile, a car alarm or immobiliser could help deter car thieves, making your vehicle cheaper to insure.
3. Geographic factors (where you live)
Next, the insurer will want to know where you live to figure out how likely you are to encounter dangerous drivers, accident blindspots, or criminals.
They’ll consider the following:
Where you park at night: Is your car in a garage overnight? A private driveway? Or on the street? Generally speaking, the safer your car is while you’re sleeping, the cheaper it will be to insure. Read more: Where Should You Park Your Vehicle at Night?
Crime rates in your area: If you live in a high-crime part of the country, you’ll probably need to pay more for your car insurance.
Accident statistics for your area: Is there a particular stretch of road synonymous with accidents near you? Many insurers will consider local traffic and accident trends when producing a quote.
4. Types of car insurance coverage
Finally, the level of coverage you choose will also impact the price you pay.
There are three main types of car insurance coverage to choose from:
Comprehensive: Comprehensive car insurance (also referred to as “fully comprehensive” or “fully comp”) is the broadest level of coverage you can get for your vehicle. It pays out if you damage your car, or someone else’s car, or injure someone in an accident.
Third-party only: Third-party car insurance is the minimum level of cover required to drive in the UK. As the name suggests, it only covers third parties (other cars, drivers or passengers, including your own passengers) in the event of an accident. However, unlike comprehensive cover, it doesn’t cover damage to your vehicle or the cost of your medical expenses following an accident.
Third-party, fire, and theft: Third-party, fire and theft is a level up from third-party only. In addition to covering third parties, it also includes cover against your own vehicle should it be stolen or suffer damage in the event of attempted theft or fire.
Is comprehensive car insurance more expensive?
You might think that having comprehensive insurance will mean paying more, but that’s not always the case. If you shop around, you could get a comprehensive quote that’s similar to (or even cheaper than) a third-party quote.
That’s because third-party insurance is often more popular with young drivers, who are statistically more likely to have an accident. As a result, many insurance providers see third-party-only insurance as the riskier choice and price it higher.
Will my car insurance cost go up if I have an accident?
Yes. If you have an accident, it was found to be your fault, and you’ve had to make a claim on your insurance, your premium will probably be higher when you renew your car insurance.
This tends to happen for two reasons:
Unless you paid to protect your no-claims bonus, you’ll have lost some or all of your no-claims discount following the accident. This will push the price up at renewal time.
By causing an accident, you’ll be viewed as a riskier driver in the eyes of many insurers. You’ll ultimately need to pay a higher premium to reflect this risk.
How can I lower my car insurance rates?
There are several ways to bring your car insurance costs down and get the best deal:
Make your car safer: If your car doesn’t already have an alarm, immobiliser, or tracker, you could have them installed to deter would-be car thieves.
Build up a no-claims discount: The more years you’ve been driving without making a claim, the bigger the discount you can earn as a reward for being a careful driver.
Add an experienced named driver: Having a parent, friend, or partner with a good driving history on your insurance as a named driver could bring down the cost of your policy.
Install a black box: Also known as telematics insurance, a black box tracks your driving performance using GPS data. This can help young or inexperienced drivers get cheaper quotes by proving they’re safe and careful drivers. Find out more about black box insurance here.
Make sure your annual mileage is accurate: If you overestimate the number of miles you drive in a year, you could end up paying more than you need to. Search for a mileage calculator on Google to make sure your estimate is accurate.
Take an advanced driving course: Learning extra skills to make you a better, safer driver could go a long way with certain insurance providers. Although there’s no guarantee of a discount, you could be viewed as a lower risk if you hold additional driving certifications.
Quickfire summary: How much is car insurance in the UK?
According to recent data, the average price of car insurance in the UK is £470 a year.
However, this cost can vary wildly depending on your age, your personal circumstances, the car you drive, where you live, and the type of coverage you choose.
If you want to reduce the cost of your car insurance premiums, consider adding security features to your vehicle, using a mileage calculator to accurately estimate your annual mileage, or adding an experienced named driver to your policy.
Looking for a winning car insurance quote? Our new clients save an average of £155*. Find out more here.
*51% of new car insurance clients saved money, with an average saving of £155 between August 2022 and February 2023.
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