Are UK car insurance prices really falling in 2025
Drivers keep reporting painful renewals, yet official data shows average car insurance premiums have started to fall in 2025. Here is what is really happening to prices, why some people are still paying more, and how to cut your costs.
Many UK drivers feel like their car insurance is still going up every year. At the same time, official data and comparison sites say average premiums are finally falling in 2025. Both things can be true at once. Understanding why can help you work out whether you are overpaying and what to do about it.
What the numbers say in 2025
The Association of British Insurers (ABI) tracks what people actually pay for cover. Its latest figures show that the average motor premium between April and June 2025 was £562, down from £622 in the same quarter of 2024, a fall of £60 in cash terms.
Source: ABI motor premium tracker, August 2025 – https://www.abi.org.uk/news/news-articles/2025/7/motor-premiums-fall---but-repair-and-theft-costs-keep-revving-up-claims/
Another major index from Confused.com and WTW reports that comprehensive car insurance premiums fell by 16 percent year on year, with the average policy at £757 in mid 2025.
Source: Confused.com Car Insurance Price Index with WTW, June 2025 – https://www.wtwco.com/en-gb/news/2025/06/car-insurance-premiums-continue-dramatic-fall-with-teen-drivers-seeing-biggest-savings
Uswitch, using ABI data, puts the average cost of car insurance in Q1 2025 at £589, and notes that the UK motor insurance market is on track to reach around £26.2 billion in value by the end of 2025.
Source: Uswitch car insurance statistics 2025 – https://www.uswitch.com/car-insurance/car-insurance-statistics/
Even so, consumer group Which points out that 2025 is still on course to be one of the most expensive years ever for insurers in terms of claims costs, with more than £3.2 billion paid out in just the first three months of the year.
Source: Which car insurance premium explainer, August 2025 – https://www.which.co.uk/news/article/whats-happening-to-car-insurance-premiums-arTnq0Z643Yh
In other words, premiums on average are no longer rising at the extreme rates seen in 2023 and early 2024 and have fallen from their peak, but they remain higher than before the pandemic.
Why premiums are still high for many drivers
Regulators and industry reports highlight several reasons why car insurance is still expensive for lots of people, even as the overall average is falling.
1. Higher repair and parts costs
The Financial Conduct Authority's 2025 multi firm review on motor insurance claims found that repair and property damage costs account for about 65 percent of the increase in total claims costs between 2019 and 2023. Newer cars, more complex technology and longer repair times have all pushed up the average cost of a claim.
Source: FCA motor insurance claims analysis 2025 – https://www.fca.org.uk/publication/multi-firm-reviews/motor-insurance-claims-analysis-multi-firm-review-2025.pdf
The RAC notes that rising compensation payouts, more expensive parts and labour, and higher personal injury claim values are key reasons why insurers charge more.
Source: RAC guide on why car insurance has gone up, October 2025 – https://www.rac.co.uk/drive/advice/buying-and-selling-guides/car-insurance-rise/
2. More expensive vehicles to fix
Industry analysis in 2025 highlights that electric vehicles and newer models often cost more to repair. They require specialist labour, calibrated sensors and longer workshop time, which increases the cost of each claim.
Source: Haden Welbeck motor insurance costs explainer 2025 – https://www.hadenwelbeck.co.uk/understanding-the-rise-and-fall-of-motor-insurance-costs-whats-happening-in-2025/
3. Inflation in claims outpacing general inflation
Official inflation data from the Office for National Statistics shows that while headline CPI inflation has eased to around 3.8 percent in 2025, some services, including insurance, have experienced higher price pressure over recent years.
Source: ONS Consumer price inflation, UK, September 2025 – https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/september2025
The ONS motor vehicle insurance index remains well above its 2015 level, reflecting several years of strong price growth before the recent small falls.
Source: ONS CPI series 12.5.4.1 Motor vehicle insurance – https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/l7je/mm23
4. Claims from uninsured drivers and fraud
The FCA also points out that the cost of claims involving uninsured drivers rose sharply between 2019 and 2024, pushing up the industry levy that all insurers must pay. Those costs ultimately feed into premiums for everyone.
Source: FCA motor insurance claims analysis 2025 – https://www.fca.org.uk/publication/multi-firm-reviews/motor-insurance-claims-analysis-multi-firm-review-2025.pdf
Why some people are seeing lower prices
If the average premium is falling, why are so many people on forums and Reddit still complaining about big price rises
One reason is that averages hide big differences between groups:
- Some drivers whose premiums jumped in 2023 and 2024 are only seeing small reductions so far.
- Younger drivers and people in high risk postcodes are still paying very high amounts, even if their renewals are marginally lower than last year.
- People who auto renew instead of switching often miss out on the biggest price cuts.
A 2025 RAC and Confused.com analysis notes that while premiums are down on average, they remain around a third higher than in early 2023, and past rises are still baked into people's bills.
Source: Confused.com guide on whether car insurance has gone up in 2025 – https://www.confused.com/compare-car-insurance/guides/has-car-insurance-gone-up
How your behaviour affects the price you pay
Martin Lewis and MoneySavingExpert are clear that how you shop for insurance can matter as much as market trends.
MoneySavingExpert reports that car insurance prices are on average 16 percent lower than a year ago and about 23 percent lower than at the January 2024 peak, based on the Confused.com index. But it also warns that many people will not see those savings if they leave renewal to the last minute.
Source: MSE car insurance price update, August 2025 – https://www.moneysavingexpert.com/tips/2025/08/12/
Key points from their guidance and other comparison tools include:
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Timing matters – Quotes are often cheapest around three weeks before renewal. Leaving it to the last few days can double the price.
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Pay annually if you can – Monthly payment plans often add interest and extra fees. A Scottish Sun report in 2025 highlighted that premium finance can add up to £51 a year to bills, with APRs over 20 percent in some cases.
Source: Scottish Sun coverage of insurers double dipping, 2025 – https://www.thescottishsun.co.uk/money/15116401/insurers-slammed-double-dipping-customers-avoid/
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Check your details – Occupation, mileage and how you store your car all affect risk. MoneySavingExpert and MoneyWeek both show examples where small changes to job title wording, without misrepresenting your work, can legitimately cut premiums.
Source: MoneyWeek article on job titles and car insurance costs, 2025 – https://moneyweek.com/personal-finance/insurance/job-titles-spike-insurance-costs
Practical steps to cut your car insurance cost
If your renewal quote in 2025 is higher than you expect, you can take several practical steps:
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Never just auto renew
- Use at least two comparison sites and check any major insurers not on those sites.
- Compare fully comp and third party, fire and theft prices, as comprehensive is sometimes cheaper.
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Shop at the right time
- Start getting quotes about three to four weeks before your renewal date.
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Review your cover level
- Check if optional extras like breakdown, courtesy car or legal cover are still needed.
- Do not remove important cover just to save a small amount if it increases your risk.
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Increase your voluntary excess if affordable
- A higher excess can lower your premium, but only if you could genuinely pay it after a claim.
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Improve security and mileage accuracy
- Using a driveway or garage and fitting approved security devices can reduce risk.
- Estimate your annual mileage realistically rather than rounding up.
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Consider a telematics policy if you are a safe driver
- Black box or app based policies can reward careful driving and are often cheaper for younger drivers.
The bottom line
In 2025, UK car insurance is in a strange place. Official figures show that average premiums are finally falling from record highs, but they are still well above pre pandemic levels, and many motorists are not feeling much relief.
The underlying pressures of expensive repairs, higher injury claims and past inflation mean premiums are unlikely to return to old lows any time soon. The best protection for individual drivers is to understand how prices are set, avoid auto renewing, shop early and keep policy details accurate.
If your renewal has gone up while average premiums are going down, that is a strong signal to shop around rather than assume nothing can be done.
