According to the Association of British Insurers (ABI), the average cost of comprehensive car insurance in the UK is £419 a year.
This figure relates to the second quarter of 2022 and is based on the price paid for insurance, rather than premiums quoted to drivers.
How much car insurance costs depends on a number of factors. These include conditions in the insurance market, the wider economy and the cost of repairs.
Although these factors are outside of your control, there are a number of steps you can take to keep the cost of car insurance to a minimum.
Some of these relate to your vehicle, and others to you personally.
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How are car insurance premiums calculated?
How much you pay for car insurance is known as the ‘premium’. This will be quoted as an annual figure, although there is usually the option to pay for insurance monthly.
When calculating how much to charge you, insurers look at your vehicle and your personal circumstances and driving history.
Insurers use this information to assess how likely it is that you’ll need to make a claim and how much that claim might be. The more likely you are to claim – based on their realms of historical data – and the more that claim is predicted to cost, the more you’ll pay for car insurance.
Which cars are cheapest to insure?
The car insurance industry puts cars into groups based on factors such as their performance capabilities, safety and security features, and the cost of replacement parts.
Assuming everything else is equal, a group 1 vehicle would be the cheapest vehicle to insure, while a high performance, high value vehicle in group 50 would be the most expensive.
Cars in group 1 include the Fiat Panda, Ford KA+, Skoda Fabia Hatchback and the Citroen C1 Vibe. Cars in group 50 include the Bentley Flying Spur, BMWi8 and the Jaguar XE.
Within these groups, the age and value of your car will also affect the premium you’re quoted.
If you make modifications to your car such as adding a noisy exhaust or souped-up engine, this will increase your insurance costs. A car alarm or immobiliser, on the other hand, will lower the cost
How does my driving history affect car insurance?
Car insurance premiums in the UK are based on the ‘main driver’ for each car. To calculate your premium, the insurer will ask questions about your driving and claims history.
If you don’t cause any accidents or make a claim on your insurance, you’ll earn a ‘no claims bonus’ which will qualify you for discounts on future premiums.
The no claims discount can be transferred between insurance companies, and you could get up to 75% discount on typical prices if you manage to stay claim-free for five years or more.
Insurers also look at any driving convictions and endorsements on your driving license. You’ll pay more for insurance if you have points for speeding on your license, while a conviction for drink-driving or death by dangerous driving will see your costs go up significantly.
How do my personal circumstances affect car insurance?
When you apply for car insurance, the insurer will ask you a number of personal questions. These include your age, marital status, where you live, and your job.
Young drivers typically pay more for insurance. This is because inexperienced drivers are more likely to be involved in accidents.
Statistically, married people are less likely to claim on their car insurance than singletons, so expect to pay more for car cover if you live alone.
However, adding a second driver with a good driving history, a parent, for example, can lower your premium.
Insurers’ statistics also show that certain professions are more likely to claim on their car insurance than others. Professional footballers are seen as high risk for example, while people who do clerical jobs are considered safer drivers.
Does where I live impact car insurance?
Drivers in some parts of the country will pay more for car insurance than others. This is because insurers look at traffic trends, accident claims and crime data where you live when calculating premiums.
They will also want to know where you keep your car at night. Parking it in a garage or in a private car park will result in cheaper insurance than if you just leave it on the road outside your house.
How much do you drive?
Insurers will also ask questions about your driving habits when deciding how much to charge you for cover.
First, you’ll be asked to estimate how many miles you drive each year. Then you’ll need to say what you use your car for – social, commuting or business (or any combination of these).
If you don’t use your car for business purposes or getting to work then just tick “social” and your premium will be cheaper.
What’s the excess?
When you ask for a car insurance quote you will be asked what level of excess you want to pay. There will usually be a compulsory excess, but you can add a voluntary amount too.
The “excess” is the amount you will have to contribute to any repair or claim before the insurance kicks in. The higher the excess the less chance the insurer will have to pay anything at all so the lower the premium.
But if you opt for a high excess consider whether you could really afford to pay this amount in the event of an accident.
Shop around
It’s important to shop around and compare quotes before buying car insurance. The cheapest insurer for one driver might be different for another driver with a different car.
If possible, pay your premium upfront in one payment. If you opt to spread payments and pay by monthly direct debit instead, you’ll be charged interest which can add up to a third onto the quoted price.
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Choose from a range of policy options for affordable cover, that suits you and your car.