According to the MoneySupermarket Monitor on Car Insurance the cost of car insurance peaked at £554 on average in April 2011, but have fallen steadily since then to stand at an 18 month low of £478 a year.

Kevin Pratt, insurance spokesperson at MoneySupermarket, said:

“There is no doubt the cost of motoring has been a hot topic, and issues such as the price of fuel hitting new highs has put additional pressure on already squeezed household budgets. Car insurance inflation was a major issue in 2010 and 2011, which led to a number of government inquiries to try and address the problem. Our analysis shows we are now seeing deflation; great news for motorists – for now.

“The main factor influencing the cost of car insurance is competition in the market between insurers. A few key insurance providers are looking to take on new business and are willing to offer low premiums to attract customers. While this competition continues, drivers will benefit but there is no guarantee how long it will last.”