The latest data from Confused.com indicates that the average cost of car insurance has increased for the first time in three years. On average, drivers are now paying £719 per year for their motor cover, which is £8 higher than the previous three months. Despite remaining £38 cheaper compared to a year ago, the trend of declining premiums seems to be reversing.
Insurers are facing escalating costs, with the average value of insurance claims surging by 42% since 2020. Nearly half of drivers have experienced higher renewal prices in the last quarter, suggesting that motorists may encounter further rate hikes when renewing their coverage, as cautioned by Confused.com.
The research, based on over six million car insurance quotes, reveals that motor premiums have been decreasing since early 2023 following a period of sharp increases post the economic impact of the Covid crisis. However, the rising cost of customer claims, a pivotal factor influencing driver payments, has been on the rise. This shift could be prompting insurers to adjust their pricing to reflect the increased risk of higher payouts.
According to Confused.com’s findings, the average payout per claim has surged by 42% from 2020 to 2025, reaching £5,464. Despite a 59% decrease in the number of claims reported during the same period, the reduced frequency is overshadowed by the elevated costs per claim.
Matt Crole-Rees, a motoring expert at Confused.com car insurance, highlighted the recent uptick in prices, emphasizing that while drivers have benefited from price drops, the current trend suggests potential increases at renewal. Crole-Rees advised drivers to shop around for the best deals and to seek quotes well in advance, as securing a quote 28 days before renewal could lead to savings of up to 53%.
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