Published: 30/12/2020
  • Average car insurance premium for Q4 2020 falls to £707 – down £24 year-on-year
  • Average cheapest premium creeps upward from £598 in Q3 to £603 in Q4, but the typical winter spike in the cost of insurance hasn’t happened
  • Premiums have fallen by £48 since the start of the pandemic, as the second lockdown causes the average premium in November to drop by £25 from the previous month.

30 December 2020 – Average car insurance premiums have dropped to the lowest level for winter in five years, according to the latest Premium Drivers report from comparethemarket.com.

The average premium in Q4 (September 2020 – November 2020) stood at £707, declining by £24 from the same quarter last year. When compared to the same period in previous years, the average premium in Q4 2020 is the most affordable since 2015. The cheapest premium available in Q4 has also fallen year-on-year. It now stands at £603 compared to £617 in Q4 2019.

Despite being cheaper than in previous years, premiums in Q4 have risen slightly from the preceding three months. Both the overall average premium and the average cheapest premium have risen by £5 since Q3. However, this minor uplift is much lower than the jump in premiums typically seen heading into winter. For instance, premiums rose by £23 between Q3 and Q4 last year.

Premiums have remained low during the Government’s social distancing restrictions. The guidance, encouraging people to work from home and to only make essential journeys, has taken many cars off the roads, in turn reducing the number of claims and helping to push premiums down. The latest Department for Transport data shows car traffic has decreased by 21% year-on-year.

In May, the Financial Conduct Authority also encouraged all car insurers to look at the risk profile of customers which may have changed significantly because of the coronavirus. It also asked motor insurers to waive cancellation fees and other charges associated with changing policy details.

As a result, average premiums have dropped by £48 since the start of the pandemic. Following the second lockdown, the average premium in November fell by £25 from the previous month to £691 – the cheapest monthly figure since March. November’s average premium is also £63 lower than the same month in 2019. The cheapest premium available has similarly decreased to £591, down from £610 in October.

While premiums may be cheaper than in previous years, the gap of £104 between the lowest and average premiums in Q4 shows that shopping around is the best way to save money on car insurance. For younger drivers, aged under 24 years old, the difference in premiums is nearly double, as a typical young person could save £204 by switching to the cheapest deal.

Premium Drivers Report

Dan Hutson, Head of Motor Insurance at comparethemarket.com, said:

“Cheaper premiums this winter are a silver lining for motorists. Drivers will be pleased that premiums are more affordable than in previous years, as household budgets continue to be strained. The cost of insurance began to rise in the autumn, but after the second lockdown came into force premiums began falling again.

“Switching to a cheaper deal continues to be the best way to cut the cost of car insurance, with our research showing the difference between the cheapest and average premium is £104. In addition, if you plan to spend less time on the road in the coming months, perhaps because you can work from home, your insurer may consider you a lower risk and cut the cost of your premium. However, as the vaccine roll-out gets underway and the economy starts to recover, premiums may also start to rise as more motorists return to the roads.”


Notes to editors:

About comparethemarket.com

comparethemarket.com was launched in 2006 and has grown rapidly over the past fourteen years to become one of the UK’s leading price comparison websites.

comparethemarket.com provides customers with an easy way to make the right choice for them on a wide range of products including motor, home, life, travel and pet insurance as well as utilities and money products such as credit cards and loans.

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comparethemarket.com is a trading name of Compare The Market Limited. Compare The Market Limited is authorised and regulated by the Financial Conduct Authority for insurance distribution (FRN: 778488) and is registered with the Financial Conduct Authority under the Payment Services Regulations 2017 (FRN: 911617) for the provision of payment services.