Why has car insurance gone up? Cheap temporary car insurance tips, why are UK insurance quotes so expensive?

Car insurance rates continue to soar for drivers throughout the UK, and according to recent data from comparison site Compare the Market, the average premium for drivers under 25 has reached £2,009.

But drivers of all age groups have witnessed upticks in insurance costs, with those over 65 facing the most significant proportional increase in premiums, according to reports.

It follows news from the Association of British Insurers (ABI) that in 2023 alone, premiums saw a 25% increase - following a 50% surge the previous year - despite insurers saying they're spending more on claims and expenses than they're collecting in premiums.

The ABI reported a 21% rise in payouts in the final quarter of 2023 compared to the previous year, with every £1 collected in premiums resulting in £1.11 paid out.

So why exactly are car insurance prices so high, and what can you do to get a good deal? Here is everything you need to know about it.

Why has car insurance gone up?

The car insurance is confronting a multitude of relatively new challenges, from rampant recent inflation to “almost uninsurable electric cars exported by Chinese manufacturers with insufficient spare parts back-up and a lack of critical repair information,” says AutoExpress.com.

Advances in car manufacturing and safety technology are causing skill gaps and repair delays, while the high costs associated with repairing EV batteries after even minor damage have exacerbated the situation due to inadequate manufacturer support.

Add to this the substantial increases in the retail prices of new cars, equally high prices on the used market, and persistent shortages of parts, and it creates a perfect storm of factors, pushing car insurance premiums skyward.

There is also an apparent surge in car theft cases, which AutoExpress.com says are “routinely treated as a ‘no victim’” insurance matter by police forces, while insurance underwriters are grappling with assessing new risks linked to potential collateral damage to other cars and infrastructure from EV fires.

The consequence of these combined challenges is a rise in motor insurance premiums, even for the vehicles deemed cheapest to insure.

The ABI reported that total payouts in 2023 amounted to £2.5 billion, driven by “increasing costs of repair, materials, labour and second-hand cars – as well as very expensive claims for personal injury from serious incidents”.

Tips and tricks to help you get the best deal on your car insurance

Shop around

One of the greatest tools at the fingertips of motorists is being able to shop around for car insurance from the comfort of your own home. There are all manner of comparison sites to use and they’ll all give you prices for cover from a variety of different providers.

A lot of these services allow you to tweak and change your policy details – such as your intended mileage – to see how it affects the amount you’ll pay.

Don’t allow your insurance to auto-renew

Many car insurance policies have an auto-renew facility. With this, your premium will auto-renew when it comes to the end of your policy. While this may sound handy, it often means that you’ll be paying more for cover because you’ve allowed it to roll over automatically.

Therefore, if your policy is coming to an end, make sure you shop around beforehand to make sure you’re getting the best deal. Of course, if your auto-renew price is the cheapest then you can let it roll over, but on most occasions, you’ll pay lower prices if you check out other policies first.

See if adding a responsible driver lowers your premium

A lot of insurance cover is based on risk and having an older, more experienced motorist on your policy as a named driver can help reduce costs. It can also go the other way – increasing your premiums – so make sure you test it out via a comparison site first.

Remember, that you still need to be the main driver. If it’s found that the ‘named driver’ on your policy is actually using your car most of all, then you could find your policy being cancelled. This action is known as ‘fronting’ and can also see insurers not paying out in the event of an accident.

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Pay annually if you can

Car insurance represents a big financial undertaking – particularly for younger drivers – and insurers do offer better prices for those motorists who are able to pay in full. Though you can spread the cost of your cover via monthly payments, you’ll spend less overall if you’re able to pay for it in one go.

Of course, if you’re not able to pay up front – and if it could add extra financial strain – then go for the monthly payment option.

Make sure your mileage is accurate

Insurers use your estimated mileage to determine how much you’ll be driving. After all, the more miles you drive, the greater chance there is that an accident could occur. So make sure you’re accurately putting down your mileage. Consider how far you drive on a day-to-day basis and factor in any longer trips that you might have planned.

Don’t be tempted to go low with your mileage, however, as if an insurer found that you were travelling a lot further than you’d stated on your policy then you could find your cover being voided.

If you’re insuring more than one car, take a look at a multi-car policy

It’s common these days for one household to have multiple vehicles and, if this is the case, you might find it to be more cost-effective to get a multi-car policy. These types of insurance offer a discount for covering more than one vehicle so it might prove a bit cheaper than covering each car individually.

However, it can go the other way too and make things more expensive, so make sure you get a number of quotes together before signing up.

£1 car insurance?!

One pay-as-you-go insurer has revealed it is giving away 52 weekends of flexible car insurance for just £1 each - even for people who don’t own their vehicle.

Veygo carried out research that revealed that having access to a car would help 93% of young people make the most of their weekends.

In response, it is giving away 52 weekends of car insurance for just £1 each, to use on any weekend you like, by insuring your own car or borrowing someone else’s.

Despite being driven by research into young people, the competition to win the 52 weekends of insurance seems to open to anyone aged 18 - 75, and can be entered via Veygo’s Instagram or TikTok at @VeygoUK.

The competition closes on Thursday 18 April at 11:59pm.