DRIVERS COULD SAVE UP TO £65 PER YEAR ON CAR INSURANCE BY PAYING UPFRONT INSTEAD OF MONTHLY
- Motorists in a financial position to do so could save up to £65 by paying their annual car insurance premium in one go, rather than making monthly payments
- Paying upfront for the whole year costs an average of £623, while the combined sum of 12 monthly payments is £688 as of December 2022
- The average cost of paying annually for car insurance has increased by £71 year-on-year, while the cost of paying monthly has risen by £83 on average
- Motorists could save up to £374 by switching their car insurance through Comparethemarket.com.
Drivers could save up to £65 each year by paying for their annual car insurance premium in a single lump sum rather than as monthly payments, according to research from Comparethemarket.com.
The average cost of paying monthly for an annual car insurance policy is £688 as of December 2022 – this is £65 more expensive than the average for a single lump sum annual payment (£623). The cost difference between a monthly versus annual payment has increased by £12 year-on-year.
Motor premiums have risen across the board over the past 12 months, as the average cost of paying annually for a car insurance policy has increased by £71 year-on-year, while the average premium for paying monthly has risen by £83. Car insurance premiums are rising as insurers pass on the higher cost of claims to their customers. The cost of car insurance claims has increased due to an uplift in the value of second-hand cars and higher vehicle repair costs. However, drivers can reduce the cost of their car insurance by shopping around. Motorists could save up to £374 by switching their car insurance through Comparethemarket.com.
|Date||Average premium - single annual payment||Average premium - 12 monthly payments||Difference in cost|
The cost-of-living crisis means motorists face increased financial pressure. A separate survey from Comparethemarket.com found that more than one in three motorists (35%) have struggled to afford the cost of driving and four in ten (40%) fear they will no longer be able to keep driving if costs continue to rise. As a result, many drivers might find it difficult to make a higher one-off payment for car insurance in the short-term, instead of paying monthly. However, for those who can afford the higher upfront cost, paying annually could be worthwhile and the savings could help offset other rising costs.
Monthly car insurance payments are typically more expensive as drivers are paying for the benefit of having the cost broken down into more manageable chunks, as well as any additional fees incurred by the insurer who may have to carry out a credit check. Most insurers will require motorists to pay an initial deposit, which is usually 20% of the annual amount. Interest is then added to the remaining 10 or 11 monthly payments.
Julie Daniels, motor insurance expert at Comparethemarket.com, comments:
“As living costs continue to rise, many motorists are feeling financially squeezed. Saving on your car insurance is always attractive, considering that the average cost of car insurance is more than £600. Although making smaller monthly payments might seem easier, if you’re in a financial position to be able to pay your car insurance policy annually, it could lead to savings of up to £65. If you are unable to pay your premium in one go, there are other options which could help save you money. Shopping around for the cheapest deal when your policy ends could save you hundreds of pounds. Switching to a telematics policy may also be a good option for some young motorists, whose premiums could be reduced if they demonstrate they are safe drivers.”
Notes to editors:
All insurance data is sourced from Comparethemarket.com. 51% of Comparethemarket customers were quoted less than the prices above for fully comprehensive car insurance as of December 2021 and 2022.
 Based on online independent research by Consumer Intelligence during November 2022. 51% of customers could achieve this saving on their car insurance through Comparethemarket.com.
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