Why is car insurance so expensive?

Sick of your car insurance getting more expensive or feel like it's doubling in price each year? Find out how to compare car insurers to get cheaper premiums and what to watch out for.

Promoted
Confused.com car insurance logo
Get cheap car insurance quotes
Save up to £523*
Compare 160+ providers
Exclusive rewards
Get a quote

Car insurance can often feel like a hefty burden on your budget, and if you’ve ever wondered why the costs are so high, you’re not alone. Understanding the factors that drive up insurance premiums can help you navigate the world of car insurance more effectively and potentially find ways to reduce your expenses. This guide delves into the key reasons behind the high cost of car insurance, including vehicle-related factors, personal driving history, and broader economic influences.

Why is my car insurance so high?

Several factors contribute to the high cost of car insurance:

  • Increased repair costs. Advances in vehicle technology and the rising cost of parts have made repairs more expensive. Modern cars often feature complex electronic systems and high-tech components, which can be costly to repair or replace after an accident.
  • Rising claims costs. The amount insurers pay out for claims has been increasing. This is due to more expensive vehicle repairs, higher medical costs for injuries, and increased claims frequency.
  • Fraud and theft. Insurance fraud and vehicle theft continue to drive up costs. Fraudulent claims and stolen vehicles lead to higher premiums as insurers try to cover the losses.
  • Changes in legislation. Recent legal changes, such as the increase in the minimum compensation payouts for injury claims, have contributed to higher insurance costs. Insurers often pass these increased costs onto consumers.
  • Increased risk factors. Factors such as higher accident rates and more severe accidents have led to increased risk for insurers, resulting in higher premiums.

Have car insurance costs gone up?

Yes, car insurance costs have risen significantly in recent years. According to Association of British Insurers, there has been a steady increase in premiums due to the factors mentioned above. For instance, comprehensive car insurance premiums in the UK have experienced fluctuations but generally show an upward trend, reflecting the growing costs of claims and repairs.

Reasons for price hikes

  • Economic factors. Inflation and economic changes affect the cost of car repairs, parts, and medical expenses, all of which contribute to higher insurance premiums.
  • Increased legal costs. Legislative changes and higher compensation payouts for claims have added to the insurers’ expenses, leading to increased premiums.
  • Technological advances. While modern vehicles are safer, they are also more complex and expensive to repair, which impacts insurance costs.
  • Frequency and severity of claims. An increase in the number and severity of claims can lead to higher premiums, as insurers anticipate greater payouts.

Average car insurance price increases

PeriodAverage car insurance cost% Increase
2020£593
2021£522-12%
2022£5546%
2023£77640%
2024£88214%

*Source: Confused.com (average car insurance cost).

What to do if your car insurance has doubled

Experiencing a sudden increase in your car insurance premium can be frustrating, and even concerning. If you find yourself asking, “why has my car insurance doubled?” – here are some steps you can take to manage, and potentially reduce your insurance costs:

  • Increase your voluntary excess. Your excess is the amount you need to pay towards any claim. Opting for a higher voluntary excess can cut your premium. Just don’t set it so high that you can’t afford to pay it if you need to claim
  • Avoid paying in monthly instalments if possible. If you pay monthly, your insurer will apply interest. As a result, you’ll end up paying more overall than if you paid the full annual premium up front.
  • Consider adding a named driver. Adding a lower-risk, experienced named driver to your policy could lower your premiums, especially if you’re young and new to driving.
  • Drive safely. Not only will this reduce your risk of having an accident, but every year that you drive safely and avoid needing to claim will increase the no-claims bonus on the following year’s premiums.
  • Avoid inessential modifications. Cosmetic or performance enhancements, such as a bespoke paint job or a pumped up engine, are likely to drive premiums up.
  • Consider telematics insurance. This uses a small device – a “black box” – installed in your car to track your driving habits. Careful driving is rewarded with lower premiums.
  • Tweak your job title. You can’t lie about your job. But, surprisingly, making small adjustments in how you describe your profession can change how much you pay for insurance.
  • Shop around every year. Always compare car insurance prices rather than just renewing with the same insurer. The best-value insurer last year may not be the best value when renewal rolls around.
Expert insight: Car insurance advice

"Car insurance prices are going up after a rise in repair and labour costs, so you are likely to pay more when you renew a policy than last year. But that doesn’t mean you should accept the first quote you’re given or even that you should stick with your current insurer. If you can find a cheaper deal elsewhere, you’re free to move – or you could always ask your insurer to lower its price. If it doesn’t, you could also ask it to throw in something else as a perk, such as breakdown cover or window and glass protection."

Bottom line

If you want inexpensive car insurance, you’ll need to compare the options available from a range of insurers. From third party cover to fully comprehensive cover, there are a wealth of policies and providers to choose from. The right policy at the right price is out there — you’ve just got to go and find it. Compare your options to find cheap car insurance that’s right for you.

Frequently asked questions about cheap car insurance

*Based on data provided by Consumer Intelligence Ltd, www.consumerintelligence.com (July ’24). 51% of car insurance customers could save £523.17
Connor Steele's headshot
Written by

Senior associate publisher

Connor is a senior associate publisher at Finder, specialising in insurance and investing. He's been sourcing and analysing data in both subjects for around 4 years, supporting Finder's publishing team. Connor holds a BSc in Accounting and Finance from the University of Sussex and when he's not at work, you can find him at his local gym keeping fit. See full bio

More guides on Finder

Go to site