The Continued Rise Of Car Insurance: Who’s Hit The Most?

Car insurance costs in the UK have experienced a significant surge over the past year, impacting drivers across all age groups.

The average cost of car insurance has risen by 58% year-on-year, with the current average premium reaching £924, up from £556 in the summer of 2022. These increases are influenced by several factors including inflation, rising repair costs, and changes in regulations.

Young Drivers (Under 25)

Young drivers have been hit the hardest by the rising costs. Drivers aged 17 to 18 are now paying an average of £2,919 per year, an 81% increase from the previous year. Similarly, 18-year-olds are facing the highest premiums overall, averaging £3,145 annually, a 70% rise. This sharp increase is due to their inexperience and higher risk profile, making them more likely to be involved in accidents.

Middle-Aged Drivers (25-49)

Drivers in the 25 to 39 age bracket have also seen substantial increases. Their premiums have jumped by over 50%, with the average cost now exceeding £1,000. For those aged 22 to 25, the average premium is approximately £1,228.68. The increases in this age group are attributed to a combination of factors including higher value claims and increased vehicle repair costs.

Older Drivers (50 and Over)

Even older drivers have not been spared, although their increases are slightly less pronounced. Drivers aged 60 and above have seen their premiums rise by over 56%, with the average cost now at £865. This demographic is generally considered lower risk, but the rising costs of claims and repairs have still led to significant premium hikes.

Much like in our previous article about rising insurance costs. Several factors have contributed to the dramatic rise in car insurance premiums across the UK:

1. Inflation and Repair Costs: Inflation has driven up the cost of vehicle repairs by 33%, including higher prices for paint, parts, and labour. This has been compounded by increased energy costs affecting repair shop operations. This has been most noticed by both bodyshop repair garages and mechanics.
2. Regulatory Changes: The ban on the loyalty penalty, which prevented insurers from charging existing customers more than new ones, has led to a rise in premiums for those who previously benefited from shopping around for cheaper deals.
3. Increased Claims Post-Pandemic: As normal driving patterns resumed post-pandemic, the number of claims increased, leading insurers to adjust premiums to cover the higher volume of pay-outs.
4. Insurance Fraud: There has been a notable increase in insurance fraud, with exaggerated claims pushing up costs for honest policyholders.
5. Technological Advances: The growing number of high-tech and electric vehicles has increased repair costs due to their complex systems and expensive parts.

The cost of car insurance also varies significantly by region. Inner London remains the most expensive area, with an average annual premium of £1,501, reflecting a 41% increase from the previous year. Conversely, regions like the North West and Scotland have seen smaller, yet still substantial, increases in the range of 40-55%.

These rising costs are becoming a significant financial burden for many drivers, particularly younger and lower-income individuals. As the economic situation remains volatile, it is expected that premiums may continue to rise in the near future, although regulators and consumer groups are closely monitoring the market to ensure fairness.

For more detailed statistics and insights, sources such as Confused.com and The Independent provide comprehensive overviews of the current car insurance landscape in the UK.