How much does car insurance cost in the UK?

The average price of car insurance in the UK is £478 per year, according to the Association of British Insurers (ABI). For those paying in instalments, this equates to £39.83 per month. The data is from January to March 2018.

We’ve focused on data from the ABI because it has very good standing within the industry as a reliable and impartial source of insurance pricing data.

Other sources of data are published online, each with their own methodology and source data. Some of these include:

Young drivers

The ABI found that young drivers aged 18-21 pay an average of £973 per year for comprehensive car insurance – more than twice the overall average.

This figure represents around 10% of the average young driver salary – making car insurance quite burdensome for many young people.

Insurance costs more for young drivers because they are more likely to be involved in crashes that cause expensive claims for their insurance companies. This is down to their lack of experience on the road, as well as increased likelihood of riskier driving by your average young person when compared to older motorists.

Some young drivers are getting cheaper insurance by using a black box – proving that they aren’t such a high risk after all by demonstrating safe driving and being rewarded with discounts.

Learner drivers

Despite provisional licence holders being among the least experienced drivers on the road, their insurance is often less expensive than you might expect.

This is because they must be supervised at all times by a responsible fully licenced driver.

Pay as you go learner insurance often costs between £2 and £7 per day – and can often be flexibly started and stopped depending on your learning progress.

Some insurers allow you to buy an annual policy as a provisional driver and upgrade once you pass your driving test. This can have some benefits, providing you’re practising your driving in your own car.

New drivers

Most new drivers are also young drivers – but not all. If you pass your driving test in your twenties, thirties or later, you’ll still start off with relatively expensive insurance quotes. Not as expensive as a new young driver mind you. At the time of writing, reliable data on the cost of insurance for older new drivers was not readily available.

Older drivers

Insurance generally gets cheaper with age and experience - up until a certain point. Some insurers find their claims experience worsens for drivers in their 70s and older. This can be linked to vision, reaction time and other age-related factors. As a result, prices will likely start to rise as drivers move into this bracket.

Convicted drivers

Driving convictions push prices up. CompareTheMarket found that six points added £328 to the cost of insurance for motorists in the UK - and with recent changes to the law, six points can be accumulated faster than ever.

Table showing the cost of car insurance in the UK by age group:

Driver AgeInsurance Price
18-20 £973
21-25 £676
26-30 £521
31-35 £450
36-40 £413
41-45 £373
46-50 £354
51-55 £339
56-60 £311
61-65 £283
66-70 £260
71-75 £276
76-80 £320
81-85 £398
86-90 £476
90+ £546

Source: Association of British Insurers 2017

What are the latest car insurance price trends?

The general trend is upwards - however the final quarter of 2017 saw the first quarterly fall for two years, according to the ABI.

What affects the cost of your car insurance?

  1. Paying monthly or annually
  2. When paying in instalments, the overall cost is higher. This is due to the APR, or interest, charged on the total premium. The benefit of paying this extra interest is cashflow - not everyone can afford to pay the full premium up front. If you can though, you could avoid paying anywhere between 10% and 30% APR or more.

  3. Insurance premium tax
  4. VAT isn't charged on insurance in the UK, but another tax, IPT, is. The rate of IPT can change - in 2015 it was 6%, and by June 2017 it had doubled to 12%. Your insurance quotes should show your total cost, broken down into its components including the premium and IPT. Fingers crossed for no more raises for a while - don't get your hopes up though.

  5. No claims bonus
  6. For every year you get under your belt without an insurance claim, you will earn a year's no claims bonus. This history of no claims can be transferred over whenever you switch insurer. The more years you have, the greater the discount you'll receive. Be warned - you may need to prove it with a certificate from previous insurers.

  7. Policy admin costs
  8. There can be various fees involved with making changes to your policy. They can add up if you aren't careful. For example, cancellation costs and mid-term adjustments. Also be aware that if you do change your details, your new info will be used to generate a new price. So while changing your car, postcode or occupation might not have a large admin fee, it could hike the price of your quote and leave you needing to pay the difference.

  9. Policy add-ons
  10. Not strictly part of your insurance - but often sold as part of the process. Usual suspects are Legal Protection and Breakdown Cover. They can provide good value if you know what you're looking for, but make sure you need them before paying - you might already have these areas covered through a family policy or your bank account.

  11. Named drivers
  12. You can add multiple named drivers to your policy. These drivers are allowed to get behind the wheel of your car - could be a partner, sibling, parent or friend. Depending on their details, they could increase - or possibly decrease - the overall cost. It's worth running quotes with and without to understand their impact.

  13. Modifications
  14. Most insurers offer lower prices for vehicles that haven't been modified since they left the manufacturer. If you want to soup up the exhaust, add a spoiler, or upgrade the stereo, you could see your insurance cost rise. It's important to check when buying a new car whether it had been modified by the previous owner - you'll need to declare mods even if you didn't make them yourself.

  15. Insurance groups
  16. Insurers use the car insurance group system to help them price up your quote. Cars in low groups 1-10 are generally cheaper, and if you get above 30 you can see a real impact. Cars in groups 40-50? Brace yourself! Click here to browse our list of UK insurance groups from 1-50.

  17. Points on licence
  18. Driving convictions will hike up the cost of your insurance. Insurers will deem you to be a higher risk based on past behaviour. It's worth noting too that if you opt to take a speed awareness course instead of points, this could still push your insurance up as you'll normally need to declare it.

  19. Postcode
  20. Certain parts of the UK are more likely to see high frequency of claims than others. This is true both on a macro level (regions and cities), all the way down to a specific road or post code. There's not much you can do about this unfortunately. As we already mentioned, beware that if you move house, you will be requoted and your cost could go up as well as down.

Bonus ideas on how to cut the cost of car insurance

  1. Choose a car that's cheap to insure
  2. Choice of car has a huge impact on your insurance quote - particularly if you're a new or young driver. Just because a car is cheap, it doesn't necessarily make it cheap to insure. In other words, that bargain 1980 Ford Mustang might be out of reach! The best way to find cheap to insure cars is to start with low insurance groups. You won't be stuck with a glorified milk float - groups 1-5 have a good range of popular small-engined cars with plenty of style and quality on offer.

  3. Get an annual policy as a learner
  4. If you buy your first car before you pass your driving test, you can practice in it outside of your professional lessons. Insuring the car on an annual policy can be a smart move here. You should be able to upgrade the policy to full licence when you pass - and in the mean time you should be racking up your no claims bonus. This brings forward your first renewal and no claims bonus a few months. One caveat: make sure to run a quote on full licence to see what your price might do when you pass your test.

  5. Shop around and use comparison sites
  6. It's quite well known now that to get the cheapest car insurance, you need to do some research. This means hitting all the big comparison sites, as well as the direct-only brands like Direct Line and Aviva.

  7. Check cashback offers
  8. They might not reduce your premium directly, but if you can get £20-50 cashback, these sites can be a great bonus. Quidco and TopCashback are the go-to options.

  9. Young drivers, add a parent to your policy
  10. It seems fairly logical that adding additional drivers should increase your insurance costs. Problem is, it's not always true. For teenage drivers in particular, adding a parent with a good driving history can cut your bill. It's also pretty handy in case they ever need to use the car.

  11. Don't misrepresent - it'll cost more in the long run
  12. Failing to be honest on your insurance quote form is fraud. You need to ensure you declare everything truthfully and accurately. If you don't, the insurer could decline a future claim, leaving you in huge financial bother. It really isn't worth it.