Average price of car insurance rises to £478

David Ross, Editor
Thu, 18 May 2023

The average price of car insurance rose to £478 in the first quarter of 2023, a 2% increase, according to latest figures from the Association of British Insurers.

The ABI’s Tracker is the only survey that looks at the price consumers actually pay for their cover, rather than the price they are quoted.

The report reveals that the average price of £478, is a 16% rise from the first quarter of 2022 and the highest since the fourth quarter of 2019 when it reached £483.

For motorists renewing their insurance, the average price paid has gone up by £8 to £436, while the average premium for new policies has risen by £14 to £545.

These increases reflect the ongoing cost pressures faced by motor insurers, including higher raw material costs for vehicle repairs.

It's worth noting that rules introduced by the Financial Conduct Authority (FCA) on January 1, 2022, ensure that the price charged to renewing customers is no higher than that charged to equivalent new customers.

However, these rules do not set or cap the level of premium for new or existing customers, as the price of insurance coverage takes into account various factors, such as claim settlement costs.

Premiums continue to rise due to several factors. Insurers have reported increasing costs, including energy inflation impacting repair expenses, a nearly 16% rise in average paint and material costs and a 30% increase in courtesy car costs for repairers. 

Jonathan Fong, the Senior Policy Adviser for Motor Insurance at the ABI acknowledged the challenges faced by insurers and the impact on policyholders.

"With households battling the rising cost of living, the last thing anyone wants is a higher motor insurance bill. Naturally, every motorist wants the best insurance deal and insurers are doing all they can to keep motor insurance as competitively priced as possible," he said

"Yet, like many other sectors, insurers continue to face higher costs. The price of certain raw materials and energy costs are rising at rates well above general inflation, and these costs are becoming increasingly challenging to absorb," added Fong.

Ask HJ

Is it more expensive to be insured as a sole driver?

I have received notification of my insurance renewal from Churchill, which is £408.20 - a 41% increase on last year. I live in Sutherland and my mileage was 8586 last year. I have one car a Skoda Octavia and am the only driver with 20 years NCB and am 79 years old. I understand that being the sole driver with one car is more expensive - why should this be the case?

Regardless of your driving record, most insurers will provide a renewal quote that is higher than the previous year, although 41% is very large increase. We would always recommend getting new quotes at renewal time rather than relying on your existing insurer, even though it is appealing to stay with the same insurer. Generally speaking, adding a second driver to your policy will only reduce your premium if they are seen as a lower-risk driver than you. In this case we would suspect that, in spite of your no-claims bonus and low mileage, your age means you are seen as a higher risk. Drivers in their 50s and 60s are seen as the lowest risk of all age groups, while drivers in their 70s will see their premiums go up with many insurers, and again past the age of 80.

Answered by David Ross

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