An increase in the average cost of car insurance places it as the ‘third most expensive household bill’.
The average cost of car insurance is now £776, after increasing by £119 (18%) in the past 3 months alone, according to the car insurance price index. Based on more than 6 million quotes over the quarter, it’s the most comprehensive car insurance price index for comprehensive policies.
According to the data, prices are now £222, or 40%, more expensive than they were 12 months ago, on average. This makes it the biggest price increase on record.
These steep increases mean that car insurance costs are close to the expensive rates people are paying for council tax and energy, according to further research. A survey of 2,000 UK drivers found that the average council tax bill is £984 per year, and £964 for energy.
Although some drivers saw some savings, most drivers are feeling the effects of these price hikes.
One of the biggest expenses for insurers is claims. During the pandemic, fewer cars were on the road. As a result, the industry saw a reasonable drop in prices to reflect the reduction in claims being made. But now, research suggests normal driving habits have resumed. This could mean insurers are having to pay out for more claims than they were 2 years ago.
A driver’s age also determines how much they pay, with younger drivers bearing the brunt of the biggest car insurance costs. Steep increases means that drivers aged between 17 and 19 are paying out more than £2,000 for their policies, on average. In particular, 18-year-olds are paying the most, with the average premium now £2,404.
This is followed by 19-year-olds, who are paying £2,097, and 17-year-olds who are paying £2,088. At the other end of the scale, drivers around retirement age benefit from the cheapest prices. In fact, for 69-year-olds, the average premium is just £413, in comparison, with drivers aged 61 and over all paying in the £400 bracket.
Louise Thomas, motor expert at Confused.com car insurance said, “Car insurance has quickly become one of the biggest expenses for drivers. If prices continue at this rate then there’s no doubt drivers could be priced off the road, as they battle with other rising costs too.
“But what we do know is that many drivers were able to save some money when it came to renewal. And shopping around was the key to this. Even if prices were cheaper for them, the price they saw online was still significantly cheaper.
“Although this isn’t all drivers can do to save money. We always advise drivers to take a look at the details of their policy and make sure they’re accurate before committing to a price. Updating your mileage, or considering additional security could easily bring your price down.
“In the current climate we want to help drivers do all they can to make their insurance more affordable. But we know the key to this will be shopping around and seeing what the best price out there is. It’s a competitive industry and we’re confident that switching will result in savings.”
