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.

Everything you wanted to know about ISAs…but were afraid to ask

The new tax year is less than a fortnight away and for ISA savers or investors, it’s hugely important. If yo...

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

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.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week