Car insurance is on the rise - latest stats show average costs
2022 vs. 2026: How the Car Insurance Market Has Evolved
Editor’s Note: While this page originally tracked the beginning of the car insurance price surge in 2022, the market has undergone massive shifts over the last four years. In 2022, drivers were hit with sudden price hikes due to pandemic-era parts shortages, a 30% spike in used car values, and the FCA's new ban on charging loyal customers more than new ones. Prices continued to skyrocket through 2023 and early 2024. However, as we move through 2026, the landscape is finally changing. We have fully updated this guide to reflect the current state of the market, where premiums are softening, even as insurers grapple with a new wave of high-tech repair costs.
What is the Average Cost of Car Insurance Right Now?
After years of relentless increases that squeezed household budgets, UK motorists are finally seeing some relief.
According to the most recent full-year data released by the Association of British Insurers (ABI) in February 2026, the average cost of comprehensive motor insurance fell to £559 in the final quarter of 2025. This represents a 10.2% drop (or £63) compared to the same period the previous year.
However, while prices are heading in the right direction, they remain historically high compared to the £419 average drivers were paying back in 2022.
Why Are Costs Still Historically High?
If premiums are dropping, why does car insurance still feel so expensive? The answer lies in the sheer volume of money insurers are currently paying out to fix modern cars.
In 2025, the ABI reported that motor insurers paid out a staggering, record-breaking £11.9 billion across 2.5 million claims. A massive 63% of this total (£7.5 billion) went strictly toward vehicle damage and repairs.
Here are the primary pressures keeping a floor under your insurance premium in 2026:
- The "Smart Car" and EV Tax: Today’s cars are essentially computers on wheels. They are fitted with Advanced Driver-Assistance Systems (ADAS), integrated sensors, rearview cameras, and complex high-voltage EV batteries. A minor bumper scrape that used to cost a few hundred pounds now requires specialized recalibration and expensive replacement sensors.
- The Skills Shortage: There is currently a severe shortage of mechanics certified to repair EVs and advanced diagnostic systems. Because fewer garages can handle these complex repairs, cars are sitting in the shop for much longer. This forces insurers to pay out significantly more for extended credit hire and courtesy cars while your vehicle waits in a queue.
- Stabilized (But High) Used Car Values: In 2022, a major driver of insurance costs was the fact that used car values shot up by 30%. According to Auto Trader's latest Retail Price Index, the used car market has finally stabilized—average prices remained essentially flat throughout 2025. However, they stabilized at a very high baseline (averaging around £17,000). Because cars are still worth a lot of money, insurers have to pay out larger sums when a vehicle is written off or stolen.
How to Save on Your Premium in 2026
Chris Bose, the ABI's Director of General Insurance Policy, recently noted that while it is encouraging to see average premiums fall, "the cost of cover remains a challenge for many households."
If you want to keep your costs down in the current market, here is what you need to do:
- Don't Settle for Auto-Renewal: Because overall prices are slowly dropping, your current insurer might offer you a renewal price that looks slightly cheaper than last year. Don't accept it blindly. Competition is fierce right now, and rival insurers are aggressively dropping prices to win new business. Always run a fresh comparison.
- Re-evaluate Your Excess: Voluntarily increasing your excess (the amount you agree to pay upfront in the event of a claim) is one of the fastest ways to lower your baseline premium, provided you have the savings set aside to cover it in an emergency.
- Pay Annually: If you can afford it, paying for your insurance in one annual lump sum rather than in monthly installments will save you from being charged high-interest rates (APR) by the insurer.
- Consider Telematics: If you are a young driver or facing exceptionally high quotes, a "black box" policy that monitors your driving habits remains one of the most effective ways to prove you are a safe driver and secure a heavy discount.
For more tips to save on car insurance, click here and to read more about the cost of car insurance, click here.
To read NimbleFins’ research and reviews of the best car insurance providers, click here.