You are here: Home - Insurance - News -

Sharp rise in car insurance costs

Written by: Paloma Kubiak
The gap between the cheapest and the average car insurance premium is at its largest since records began, research reveals.
Sharp rise in car insurance costs

It stood at £110 for the three months to February 2016 after seeing a rise of 4% on the previous quarter.

The average car insurance premium is now £682.26, while the cheapest premium stands at £571.68. According to’s motor insurance index, this is the largest gap since records began in 2012.

The percentage difference between the cheapest and average premiums hasn’t seen such a significant spike as both rose in equal measure.

Last year was a difficult year for drivers who faced premium hikes of £71, compared to a £2 increase the year before. The cheapest policies rose by £56 in 2015.

However, the price rises hit the youngest generation hardest with the average premium for those aged under 30 now standing at £1,094.

YMoney MotorIns Table

Insurance Premium Tax hike

Simon McCulloch, director of insurance at, said: “Many motorists will be disappointed to see a sharp rise in their annual car insurance premium. Whereas prices prior to this year remained stable, 2015 saw premiums rise fairly quickly. The challenge of reducing high insurance costs has fallen almost entirely on drivers to reduce their bills by switching.

McCulloch said that the Insurance Premium Tax (IPT) hike also affected pricing, noting “it’s no coincidence that when the 3.5% tax hike was announced, premiums began to rise”.

While the government’s intention may have been to tax insurers, it seems that most providers have simply had to pass on these additional costs in full to customers.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Unfamiliar banks woo savers with top rates…is your money safe?

If you’ve been keeping an eye on the savings best buy tables, you’ll have noticed some unfamiliar names lu...

What the base rate rise means for you

The Bank of England has raised the base rate by 0.25% to 0.5% – following on from the increase from 0.1% to ...

How to get help with your energy bills

The rise in the energy price cap from April will mean millions of households will pay hundreds of pounds a yea...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week