Car insurance premiums fall again

The average cost of car insurance fell again in the three months to September 2024, making it the second consecutive quarter of falling prices.

Prices were down 2% to an average of £612, following an earlier 2% drop in Q2 2024.

However, the average premium still remains a considerable 9% higher than the same period last year. That equals an extra £50 on the average premium in just one year.

The figures were published by car insurance trade body the Association of British Insurers.

"While our latest figures show the second consecutive quarterly drop in average motor insurance premiums, we know that the industry continues to face significant cost pressures, and the price of cover remains a strain on household finance." says ABI director Mervyn Skeet.

He insisted the industry remains committed to supporting motorists – and, as part of this, is supporting the government’s taskforce investigating car insurance prices.  

The ABI noted the peak for car insurance prices was actually back in Q4 2017. Today, when adjusted for inflation, that £612 average car insurance premium is £23, or 4%, less than this peak.

That’s despite the average cost of a settled claim rising 21%. Indeed, car insurers paid out £2.9bn in Q3 2024 alone, which is up 14% on the £2.5bn paid out last year.

The average claim paid is £4800, 8% higher than last year. Interestingly, the average claim for theft of a vehicle dropped 7% to £12,200, but theft from a vehicle increased 17%, to £3000.

Overall, thanks to increasingly complicated modern cars, repair costs for the period totalled £2bn, a whopping 26% increase on 2023.

Ask HJ

Do I have to pay a cancellation fee if my insurance was not renewed?

I was insured until just over a week ago when I could not find the renewal notice so switched to another provider as I was about to go on holiday and short of time. I assumed that as the insurer couldn't take payment from my card (new one had been issued in the last few months) the policy would not renew. They have just asked me for a £50 cancellation fee. Can I ignore that?

Insurers may charge a cancellation fee if a policy is terminated early, even if automatic renewal was not completed due to a payment lapse. Ignoring the £50 cancellation fee could potentially impact your credit score. So, if you feel like this charge is unfair, it is best to contact the insurer to ask if this can be waived. If unsatisfied with their response, you could escalate this to the Financial Ombudsman Service.

Answered by Rhydian Jones

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