The Rising Cost of Car Insurance

As we all look for ways to save, the rising cost of car insurance is a growing concern.

According to the Association of British Insurers (ABI), motor insurance costs were up by 12% in Q4 of 2023 on Q3, as a result of record increases in the cost to insurers to pay claims.

The ABI also found that in 2023, motor cover was 25% more expensive on average than in 2022.

There are several key factors that could be to blame for the recent rise in car insurance prices.

Page Contents

Why Has Car Insurance Gone Up?
How to Make Car Insurance Cheaper
Which Personal Factors Affect Car Insurance?
FAQs

Why Has Car Insurance Gone Up?

Car insurance costs continue to rise, in part due to the rising costs for insurers.

The biggest factor is repair costs, which have risen because of increasing labour and energy costs.

Other factors include increasing levels of car theft, the rising costs of new and used cars, and inflation.

Longer repair times are also increasing the cost to provide replacement vehicles, and the cost to replace written-off vehicles has increased as new car costs continue to rise.

As electric vehicles become more popular – with some manufacturers planning only to make EVs in the future – this has lead to an increase in expensive, tech-focused cars.

Whilst Prime Minister Rishi Sunak has announced that the ban on selling new petrol and diesel cars will be delayed until 2035, it is expected that electric vehicles will continue to increase in popularity.

Electric vehicles tend to cost more and are more costly to repair following an accident.

There are often delays and backlogs for electric vehicle repairs, too.

For insurers, this means spending more on claims and costs than they are collecting in premiums.

With electric vehicles being as expensive as they are, many drivers are looking into buying second hand cars instead.

Second hand cars are keeping their value for longer, meaning more expensive claims for insurers if the car is written off – thereby pushing up insurance costs for drivers.

There has also been an increase in claims following the pandemic, which could explain why car insurance costs have gone up.

The return to normal driving habits and the cost of living crisis have both similarly had an impact on the rise in car insurance costs.

How to Make Car Insurance Cheaper

To try and make your car insurance cheaper, you can do the following:

Re-assess car insurance options
Reduce your annual mileage
Pay your annual insurance premium in one go
Avoid paying for optional extras
Park close to home overnight
Opt for telematics car insurance
Don’t auto-renew
Pay a higher voluntary excess

Please note that this list is not exhaustive - there may be more you can do to lower your car insurance costs.

Make sure that you do your research when making any changes to your car insurance or choosing the right insurance provider for you.

If you choose to pay a higher voluntary excess, you need to make sure that you can afford to pay both the voluntary excess and the compulsory excess set by your insurance provider in the event you need to make a claim.

If you are a new driver, you may be able to add a responsible driver to your policy.

However, you should not add someone as the main driver if they aren't actually the main driver – this is known as ‘fronting’ and is considered to be fraud.

You should also be truthful and accurate when describing your job title, as certain jobs will be considered riskier than others by insurers.