Increasing insurance premiums: how to find the best deal

The average car insurance premium has hit £470, according to the Association of British Insurers (ABI), but savvy drivers could pay less.

The ABI, which tracks the actual premiums paid by drivers, found that prices had gone up for both new policies, and those renewing.

You'll pay £531 on average for new policies – a record high – and £428 for a renewed policy.

Comparison site Confused.com has reported that the average price quoted for car insurance went up to £629.

As these are averages, what you pay will depend on a number of factors, some of which you can't change, but some of which you can.

Here we explain how to save on car insurance even as average premiums rise.

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Why have car insurance premiums increased? 

Like most things, car insurance has been impacted by the rising cost of living. The price to repair and replace vehicles and their parts has increased. 

Average paint costs for repairs have gone up 20%, while energy inflation has prompted an additional £71.75 energy cost to each car repair. 

And the ABI has reported that an estimated 40% of all car works and repairs are slowing due delays in getting spare parts.

Over the longer term, driving and accidents hit an all-time low during the pandemic, so it was likely that the costs would slowly bounce back as we resumed life and people took back to the roads.

• Find out more: How to find cheap car insurance 

Car insurance averages vs how much you actually pay

You could end up being quoted car insurance above the average because of factors that you can't do much about.

These could include being a younger or less experienced driver, living in a 'riskier' area or driving a more powerful car.

But other factors you can change, leading to cheaper quotes.

First and foremost this includes which insurer you opt for (more on that below), but also factors such as the excess you set, the add-ons (such as key cover) you include and whether you pay monthly or annually.

While insurers price different customers in very different ways, our survey of customers revealed which insurers are considered better value.

Our reviews of leading insurers explain how to save money on their policies, such as discounts for insuring multiple vehicles, or buying car and home insurance together.

• Find out more: Best and worst car insurance companies 

How do you find cheap car insurance? 

When the time comes for your insurance to be renewed, take your time with finding your next policy. 

Your provider will let you know 14 to 21 days before that your agreement is ending and is up for renewal, which generally happens automatically if you don't do anything.

But your best bet is to shop around and get a sense of what is going on in the market. This will help you to find cheap car insurance . 

Follow these five tips to help you get a better car insurance deal. 

1. Do your research

It's important you have a strong understanding of the prices and policies on offer to you before you commit to one.

Comparison sites such as Confused.com can give you an overview of premiums, excess and other details in one place. But there will be some insurers like Direct Line and #NFU Mutual who will not work with them. 

A cheaper quote from another insurance can be used to haggle with your current insurer.

• Find out more: how to negotiate cheaper car insurance

2. Consider comprehensive policies

You'd think comprehensive car insurance would be more expensive than third-party cover, given you're effectively buying more insurance.

Yet in some cases comprehensive cover can prove cheaper, even if you never need to claim on it.

This is because insurers price in part on how risky they think certain types of drivers are, and drivers with third-party policies are sometimes considered riskier.

So when you're shopping around, it's important to get quotes for both comprehensive and third-party policies.

3. Set a realistic excess

One way to keep your insurance premiums down is to increase how much excess you're willing to pay if you get into an accident. 

Voluntary excesses can vary; sums set at £100, £250 and £500 the most popular. If you were to set it at £500, this would lower your annual premium, but it means you would have to pay £500 upfront for every accident you get into. 

It's vital that this is something you believe is within your budget, so you don't get forced off the road because you can't afford repairs.

4. Check your personal details 

There are a number of surprising details that can lower your car insurance premiums, including your mileage and profession.

When you renew or apply for a policy, make sure your personal details are up to date and accurate. 

There may also be specific policies that are better suited for you, such as learner driver, over-50s and electric car insurance. 

5. Pay annually

While at the time of purchase monthly instalments seem like the more attractive option, allowing you to spread the cost over 12 months, you will pay more in the long run.

Paying one lump sum at the beginning of the policy, while an initial dent in your budget, is the cheaper option. 

You can spread out the payments over 12 months using an interest-free credit card.

Which? Limited is registered in England and Wales to 2 Marylebone Road, London, NW1 4DF, company number 00677665 and is an Introducer Appointed Representative of Inspop.com Ltd for the introduction of non-investment motor and home insurance products (FRN 610689). Inspop.com Ltd is authorised and regulated by the Financial Conduct Authority to provide advice and arrange non-investment motor and home insurance products (FRN310635) and is registered in England and Wales to Greyfriars House, Greyfriars Road, Cardiff, South Wales, CF10 3AL, company number 03857130. Confused.com is a trading name of Inspop.com Ltd.