At a glance
Car insurance prices depend on factors such as your age, car type and postcode
Rising repair costs and more expensive claims can push premiums up
Changes to your circumstances, such as your job or address, can affect how much you pay
Compare quotes to search for the right cover for you
Why is my car insurance so expensive?
Car insurance prices depend on a mix of factors, including:
Your age
Your driving history
Where you live
Your car make and model
Wider industry costs.
If your premium has increased at renewal, check your policy details and make sure all your information is accurate and up to date.
For instance, if your job has changed, this can have a significant impact on your quote.
And it’s always worth comparing policies to make sure you’re getting the best value car insurance for you.
Why has car insurance gone up?
Prices tend to increase as cars and technologies advance. Some of the main contributing factors include:
Cars cost more to repair
The rise in electric cars and advanced features makes vehicles more expensive to repair.
Many modern cars now come with lots of sophisticated tech, such as 360-degree cameras, parking sensors and touchscreen dashboards. The batteries used to make electric and hybrid cars are also costly.
Inflation and rising material costs have pushed up repair bills. Those increased costs can, ultimately, affect how much drivers pay for car insurance.
Rising claim costs
When insurance providers pay out more claims, it can push up car insurance prices across the market.
As the value of both new and used cars rises, along with repair costs, claims become more expensive to settle. Insurance providers may then pass these higher costs on through increased premiums.
Insurance Premium Tax (IPT)
IPT is a tax that’s automatically added to many insurance product premiums. It’s calculated as a percentage of your premium and you pay it as part of your initial cover cost.
The standard IPT rate, which applies to most car insurance policies, is 12%.
You can pay an even higher rate of 20% if your car insurance is arranged by a car dealer or supplier.
Serious injury compensation
Insurance providers must follow something called the Personal Injury Discount (PID), or Ogden Discount Rate, to help calculate lump sum payouts for life-changing accidents.
In a nutshell, the lower the rate, the higher the cost to insurance providers – which also means higher premiums for policyholders.
Insurance fraud
Insurance fraud can increase costs for providers and, in turn, bump up car insurance premiums.
Motor insurance fraud is one of the most common types of opportunistic fraud.
In fact, fraudulent whiplash claims – where people fake or exaggerate neck injuries in hopes of a payout – became so common that the government brought in new rules to counter them.
The Whiplash Injury Regulations 2021 have been designed to curb disproportionate payouts and lower premiums for motorists.
Another type of car insurance fraud is fronting. This is when one driver claims that another person (often a parent or other more experienced driver) is the main driver on a policy to get a cheaper premium.
Uninsured drivers
Thousands of people drive illegally without insurance every year. As they don’t pay a premium, it leaves other drivers to foot the bill.
Injuries caused by uninsured and hit-and-run drivers adds a huge expense to the UK economy, which is then passed on to insured drivers in their premiums.
What other factors can cause a car insurance increase?
Personal circumstances still account for most of the difference in premiums between drivers.
The higher your risk of having an accident and making a claim, the more expensive your car insurnace is likely to be.
Common risk factors include:
Age
Young drivers tend to pay the highest premiums as they don’t have much driving experience yet. The cost of car insurance generally falls as you get older.
Our data shows that under-25s typically pay £1,340 for comprehensive cover1, while drivers in their 50s pay around £3692.
Postcode
Some postcodes are considered at higher risk of theft and vandalism than others.
For example, if you live in a city centre, your car will probably cost more to insure than if you have a rural postcode.
Job title
If your occupation is considered high-risk, you could end up paying more. For example, a labourer might have a higher premium than an office worker.
Car insurance group
Insurance providers assign different car makes and models to different car insurance groups, based on risk. Generally, the higher the group your car is in, the higher your premium will be.
Find out what else can affect the cost of your car insurance premium.
1 51% of young drivers between 17-24 years old could achieve a quote of up to £1339.58 for their car insurance based on Compare the Market data in June 2026.
2 51% of over 50s could achieve a quote of up to £368.93 for their car insurance based on Compare the Market data in June 2026.
Why did my car insurance rise after auto-renewal?
The cost of your car insurance can go up for several reasons if you let it renew automatically.
It’s more likely to go up if you’ve had an accident, made a claim or received points on your licence. Economic and market factors, like inflation, can also make a difference.
Or it could simply be that you’re getting a poor deal when your car insurance auto-renews. That’s why it’s a good idea to avoid auto-renewal and shop around instead to see if you can get a better deal elsewhere.
Previously, insurance providers were allowed to increase prices on renewal to subsidise cheap introductory rates for new customers.
But that’s no longer the case since this practice of ‘price walking’ was banned by the Financial Conduct Authority (FCA) in January 2022.
Even so, there's a good chance you'll save money by comparing car insurance quotes.
How can I reduce my car insurance costs?
Car insurance is an unavoidable expense and you can’t control many of the factors that affect the cost. But a few things that may help reduce your premiums include:
Consider black box insurance – a small device or phone app monitors your driving habits. If you prove to be a safe driver, you’ll likely be rewarded with cheaper insurance when you renew your policy.
Build up a no claims discount (NCD) – for every year you drive without making a claim, you’ll receive a discount on the following year’s premium. Our data shows that drivers with up to three years’ NCD pay around £822 compared to £1,611 for those with no NCD3.
Pay a higher voluntary excess – this is the portion of your claim costs that you agree to cover. Upping your excess could lower your premium. Just make sure you could afford to pay it alongside the compulsory excess.
Drive less – can you car-share or work from home on some days? Reducing your annual mileage could save you a few pounds.
Switch to a cheaper car – cars with smaller engines are generally cheaper to insure than high-performance vehicles.
Shop around – don’t assume your renewal quote is the best you can get. Shopping around can make a big difference to the price you’ll pay. So why not see if you can save money on your next premium by comparing with us?
See more tips for getting cheaper car insurance.
3 Based on Compare the Market data in June 2026.
What factors could influence insurance costs in the future?
New technology is sure to have one of the biggest impacts on future car insurance costs.
However, technology is also providing drivers with many improved safety features, which could lead to fewer accidents, fewer claims and, therefore, cheaper car insurance.
Looking for a car insurance quote?
Compare car insurance quotes with us and you could save up to £4854.
4 Based on Online independent research by Consumer Intelligence during June 2026, 51% of customers could achieve this saving on their car insurance through Compare the Market.
FAQs
What is the average car insurance cost in the UK?
Our latest research shows that the average car insurance premium stands at £593 as of June 2026. That's a 27% decrease in since the same time in 2024.
At what age does my car insurance go down?
As long as you’re claim-free, the cost of car insurance should start to drop once you’re 25. This is because, statistically, young drivers aged 17-24 are more at risk of being involved in a road accident.
Looking for something else?
With more than eight years’ experience in writing and sub-editing content, Karen started her career in fashion before making the move to insurance. She now specialises in producing clear, engaging content that helps people make better financial decisions.
Karen’s areas of expertise include insurance products, such as car insurance, travel insurance and life insurance, as well as utilities such as energy comparison.
Stephen Maunder is an experienced personal finance editor, having spent more than a decade working for consumer print and online titles. He won several industry awards for his personal finance features at Which?, before becoming Deputy Editor at Compare the Market.
Amy helps make sure you get the best value when choosing insurance. Thanks to more than four years’ experience at Compare the Market, she understands what people look for, working closely with insurance providers to offer you deals and services that are fair, easy to understand and right for your needs.
Our content is written by a Compare the Market expert, backed by data and enhanced by technology. Find out how we ensure accuracy and quality in our Editorial Guidelines.
