Motorists face average costs of nearly £1,000 for car insurance – the highest price recorded in the UK, according to latest data from Compare the Market.
Premiums have risen £366 on average – a 52 per cent year-on-year increase – to a typical price of £995. Young drivers have been particularly hard hit with their premiums rising £655 in the past 12 months to £2,002.
New drivers aged 17 have seen annual increases of 98 per cent, the equivalent of £1,423 on average, bringing the average price of a policy to £2,877.
Eighteen-year-olds face a £1,447 (84 per cent) increase in prices, thus paying more than £3,000 for the first time. Their premiums have reached £3,162 on average.
“The significant rise in the cost of car insurance may in part be due to a rise in the cost of claims for insurers,” the online comparison site said. “High inflation rates will have likely impacted many areas of the motor repair industry including the cost of spare parts, energy, and hiring specialist mechanics.”
Record payouts for claims of £2.54bn in the third quarter of 2023, according to the industry body Association of British Insurers, as well as damaged caused by Storm Babet, particularly in Scotland and the East Midlands, further added to the quoted premium increases.
London remains the most expensive region in the UK for car insurance. Drivers in Inner and Outer London pay £1,607 and £1,291 respectively, on average.
Other parts of the UK are also facing steep rises. Prices in Northern Ireland passed the £1,000 mark for the first time on record after a £383 (57 per cent) increase in the past 12 months, bringing the average premium in the region to £1,051.
Drivers in central Scotland have experienced a 64 per cent (£350) increase in prices, resulting in their insurance premiums doubling in two years, with the average driver now paying £897.
Louise Thomas, of Confused.com, said it was a “bleak time for drivers and their car insurance – that’s even if they’re able to save compared to the year before”.
She urged drivers to review their policies to see if there are other ways they can save, especially as the cost of living crisis continues to impact many. “While prices are up across the board, it’s clear from the data that those who choose to shop around rather than renewing their policy could be better off.
“This could be a key consideration for some drivers, who are paying significantly more than the UK average. For example, younger drivers are paying the highest prices.”
Jenny Ross, of consumer champions Which?, stressed that shopping around for cheaper insurance was better than simply renewing. “With household budgets under strain during the cost of living crisis and car insurance premiums at a record high, many drivers will understandably be feeling apprehensive about renewing their insurance.
“However, there are ways to find a more affordable deal. It’s important not to renew your policy without first checking if you could pay less. The price quoted by your insurer is not necessarily the best price you can get. Doing your research on comparison sites, haggling and switching are effective ways of bringing down premiums.”
Prices are forecast to rise a further 6 per cent this year.
