The latest data from Confused.com reveals that the average cost of car insurance has gone up for the first time in three years. Drivers are now paying an average of £719 annually for their motor cover, which is £8 more than the previous quarter. Although prices are still £38 lower compared to a year ago, the trend of decreasing premiums may be changing.
Insurers are facing higher costs as the average value of insurance claims has increased by 42% since 2020. Nearly half of drivers have experienced higher renewal prices in the last three months, indicating that motorists might face further price hikes when renewing their cover.
Based on over six million car insurance quotes, the latest car insurance price index by Confused.com and WTW highlights a shift in the trend. While motor premiums had been decreasing since the beginning of 2023 following steep increases due to the economic impacts of the Covid crisis, the cost of claims has been on the rise in recent years.
The average payout per claim has surged by 42% from £3,842 to £5,464 between 2020 and 2025. Despite a 59% decrease in the number of claims during the same period, the data suggests that the remaining claims are significantly more expensive to settle.
Matt Crole-Rees, a motoring expert at Confused.com car insurance, noted that drivers have enjoyed lower car insurance prices for a while, but the recent uptick signals a potential increase in costs for motorists during renewals. While fewer reported claims have been made in recent years, the rising expenses for insurers to resolve claims are likely contributing to the price adjustments. Crole-Rees emphasized the importance of shopping around for insurance renewals and highlighted that obtaining a quote 28 days in advance could lead to savings of up to 53%.
By being proactive and seeking quotes early, drivers can potentially reduce their insurance expenses.