Average car insurance premium falls £60 in a year
Fri, 29 Aug 2025
The average car insurance premium is now £60 cheaper than it was a year ago, with motorists now forking out £562 instead of £622.
Industry body the ABI says that, when adjusted for inflation, the savings are even greater – a handy £81 drop.
However, stubbornly high repair and theft costs are keeping car insurance premiums higher than they could be.
The ABI says its car insurance members paid out a heady £3.1bn in car insurance claims during Q2 2025 alone. This maintains the record-breaking level of quarterly payouts seen in Q1 2025.
What’s more, repair costs continue to rise, increasing by £100m in Q2 2025 to £2.1bn.
Increasingly sophisticated modern cars are behind the rise in repair costs. The ABI says complex electronics, advanced sensors and highly-integrated systems mean repairs are both more intricate and time-consuming.
Inflation is also hitting the price of parts, materials and operational overheads. Meanwhile, a shortage of skilled technicians is slowing repair times, which is also inflating costs.
Overall, car insurers settled 669,000 claims in the previous quarter, 5% up on the 639,000 claims in the first three months of the year.
Mark Shepherd, head of general insurance policy at the ABI, said it was encouraging to see car insurance premiums falling for a second consecutive quarter, “offering some much-needed relief to drivers.
“But with the cost of cover still weighing on household finances, we must not lose momentum in tackling the persistent pressures driving up claims.”
Solutions the ABI is pressing the government on include “investing in training for the repair sector, improving road safety and holding firm against any rise in Insurance Premium Tax in the Autumn Budget”.
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