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Car insurance premiums have been on the rise. In the second quarter of 2024, the cost of car insurance rose 21% compared to a year ago, according to data from the Association of British Insurers.
As a result, many drivers in the UK will have noticed an increase in the cost of their own car insurance in the past year. If you’re one of them, you’re probably wondering: “Why is my car insurance so high?”
Unfortunately, there’s no single answer. Many factors influence the price you pay for car insurance. Some might seem obvious, like having a recent speeding ticket on record. But others may be less apparent, like your job or postcode.
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Why your car insurance is so high
The five main reasons your car insurance premium might be expensive right now are:
» Skip ahead: How to save on car insurance
1. Your personal characteristics
Age
Statistics show that younger, less experienced drivers are more likely to be involved in an accident. As a result, insurance companies generally charge higher rates for drivers aged 17 to 24. Similar risk concerns mean you may also see premiums rise in your 70s or 80s.
Below is the average cost of car insurance in the UK for drivers of different ages.
Marital status
Car insurance companies often offer lower rates for married drivers than for those who are single, separated, divorced or widowed.
Address
Location is one of the primary factors affecting car insurance premiums. Average rates can vary depending on where you live in the UK and your postcode. For instance, rural drivers may pay less than those in cities, where vandalism, theft and crashes can be more common.
Occupation
Drivers with certain jobs pay higher rates because they’re more likely than others to make an insurance claim, according to some insurers. For instance, your premiums may be higher if you drive a lot due to your work, or have what might be considered a stressful job.
Credit history
Your credit score can affect the price of your car insurance. Data shows that drivers with a poor credit history tend to make more claims. To counter this apparent risk, insurers may charge higher rates to certain motorists with bad credit.
Health
Drivers with certain medical conditions may pay higher car insurance premiums if insurers believe the health condition increases their risk of making a claim. Rates may be affected if you have Alzheimer’s or Parkinson’s, diabetes, epilepsy, a serious eye condition, heart problems, a physical condition, sleep apnea, or are about to undergo surgery.
Does your gender affect car insurance rates?
Legally, your gender should not affect the car insurance premium you pay. This means an insurance provider can’t specifically use your gender as a reason to charge you more or less for car insurance. That said, statistics show that, on average, women pay less for car insurance than men. However, this is a reflection of different driving habits between genders which, in turn, affect the various factors insurers are allowed to use to calculate premiums.
2. How you drive
Driving record
If you have recent driving offences, you’ll pay more for car insurance than a driver with a clean record. For example, data from Admiral suggests you’ll pay, on average, 58% more for your premiums if you’re caught speeding on a motorway and have accumulated between four and six penalty points on your licence.
How penalty points can affect car insurance
| Offence | Conviction code | 1-3 penalty points | 4-6 penalty points | 7+ penalty points |
|---|---|---|---|---|
| Speeding on a public road | SP30 | +34% | +58% | +94% |
| Speeding on a motorway | SP50 | +35% | +58% | +89% |
| Breach relating to vehicle control, eg using mobile phone | CU80 | +55% | +71% | +174% |
| Speeding in a goods vehicle | SP10 | +33% | +57% | +95% |
Source: Admiral, figures reported November 2023
Claims history
If you haven’t had any accidents or made any recent claims, you’ll build up a no-claims discount (NCD), which can lower premiums considerably. The Association of British Insurers suggests one year of NCD has the potential to lower a typical premium by up to 30%, while having five years of no claims history could save as much as 60%.
Mileage
Low-mileage drivers often get cheaper car insurance, because less time on the road means fewer opportunities for an accident.
Purpose for use
If you use your car for business purposes, drive long distances for your job, or deliver goods, you can expect to pay more for insurance than if you only use your car for social, domestic and pleasure (SDP) activities.
» MORE: What is business car insurance?
Parking
Keeping your car in a garage is less risky than parking it on the street, and your insurance rates may reflect this.
Years of driving experience
If you started driving at 23, you’ll probably pay more for car insurance at 25 than someone your age who’s been driving since 17. Your rates are likely to decline as you get more experience behind the wheel.
3. Your vehicle
Car make and model
The value of your car, which is typically based on the model, make and age of your vehicle, plays a big role in the price you pay for car insurance. Your premium is based in part on the claims your insurer has seen from other people who drive the same model as the car you’re insuring.
Factors such as how much a vehicle will cost to repair and the likelihood of it being stolen are also considered. For example, insurance for electric cars tends to cost more due to their higher price and specialist parts.
Features and modifications
Vehicles with extra features like lane sensors, reversing cameras, modified exhausts and high-end audio can cost more to repair — and therefore more to insure — than base models of the same vehicle.
Safety features
Vehicles with a strong safety record and good safety equipment may lower your insurance costs. On the other hand, some safety features can lead to higher premiums, because high-tech safety equipment can be expensive to repair or replace after an accident.
4. Your car insurance choices
Insurance companies
If you’re wondering why your car insurance premium is so high, a big reason might be the insurer you chose. Huge savings may be possible if you shop around to find the cheapest car insurance.
That’s why it’s important to compare car insurance quotes.
» MORE: Compare car insurance
Tim Leonard, Senior Writer and Car Insurance Expert at NerdWallet
What Our Nerds Say
“I never choose an insurance policy on price alone, because the cheapest car insurance may not necessarily give me the cover I need. Instead, I spend a few more minutes finding the car insurance that best suits my needs at the best possible price.”
Level of cover
The cost of car insurance can vary widely depending on the level of cover you want. Comprehensive cover, which is sometimes referred to as ‘fully comp’, provides the most extensive protection, while third party insurance is the most basic policy available. There is also an option called third party, fire and theft.
Typically you would expect comprehensive insurance to cost the most, yet, perhaps surprisingly, that isn’t always the case. Knowing what type of cover you want as a minimum is essential when comparing premiums.
Different types of car insurance explained
Exact coverage can differ between insurers and policies, but generally, the three main types of car insurance are:
COMPREHENSIVE
This covers damage to your car or if it’s lost as a result of an accident, vandalism, it’s stolen, or fire. It should cover the cost of repairs or replacing your car, as well as the medical costs of you, and your passengers, resulting from injury. It can also also cover the cost of damage to someone else’s car or property, and their medical costs.
THIRD PARTY
This covers against the cost if you’re in an accident causing damage to another party’s car or property, and potential compensation for injuries suffered. However, there’s no cover for damage to your own car or medical bills, or if it’s stolen.
THIRD PARTY, FIRE AND THEFT
This is the same as third party cover, but with added protection in case your car is damaged by fire or stolen.
Optional add-ons
When buying car insurance you’ll be offered the chance to buy various add-ons providing extra cover. These can include extras such as legal protection, personal accident cover, breakdown cover, NCD protection, misfuelling cover, and key cover. Some policies may include some of these as standard, but if you have to pay extra, you need to work out if the benefits are likely to be worth it to you.
Excess
Your excess is the amount you must pay yourself when your insurer pays for a claim. For example, if your insurance provider approves £3,000 worth of repairs and your excess is £500, your insurer will pay £2,500, and you pay £500. Your insurance premiums will be lower if you choose a higher excess, like £1,000, but the payout will be lower if you claim.
Auto-renewing
Just before your existing policy is about to end your insurer will send you a quote for continuing your cover with them for another year. It may be the easy option, but it’s important not to auto-renew your policy without checking to see if cheaper cover is available elsewhere.
5. Economic factors
Rising costs
Rising costs from inflation don’t just impact people – they impact insurance companies, too. If car prices and repair costs go up, insurers will likely increase premiums to keep up with more expensive payouts.
Increase in claims
On top of having to pay more for a claim, insurance providers are also receiving a greater number of claims. This means having to raise rates to cover costs.
The cost of car insurance has been rising
The below chart shows the change in car insurance prices over time. Average car insurance premiums dropped lower to £622 in the second quarter of 2024, down from £635 in the first quarter, according to NimbleFins. However, before that, the general trend shows how premiums had been rising steadily since the start of 2022.
How to save on car insurance
If you’re wondering how to get cheap car insurance, here are seven things you can try:
- Compare quotes from multiple insurers. Whether you’re a new driver or have received your renewal quote, taking the time to compare car insurance is always a must.
- Pay for your cover annually: Choosing to pay a monthly premium usually costs more overall, so make a single upfront payment if you can.
- Cut back on your mileage: The fewer miles you drive, the better the premium you may be able to get.
- Increase your excess: A higher excess can lead to lower premiums. Just make sure you’re able to pay it if you ever get in an accident.
- Reconsider your car: New and expensive cars tend to cost more to insure than older or cheaper cars.
- Take care of your NCD: If you’ve built up several years of no-claims discount, and it’s saving you a lot, it may pay to think carefully if you’re considering a fairly minor and low cost claim.
- Add another driver: If you’ve only just started driving, including someone on your policy who has more experience behind the wheel, such as a parent, could reduce the cost of your insurance.
Frequently asked questions
Car insurance premiums are determined by factors you can control — such as where you live, the type of car you drive and the level of cover you buy — and those you can’t, such as your age or the rising cost of repairs.
Shopping around for car insurance quotes every year is the best way to make sure you’re paying as little as possible. Paying for your cover annually, agreeing to a higher excess, and building up a no-claims discount are other effective ways to reduce your car insurance premium.
Although dozens of factors go into your final insurance premium, these are among the most important:
- Your driving history.
- Your age.
- Where you live.
- The car you drive.
- The cover and excess you choose.
Image source: Getty Images
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