Following extremely high rates in 2023, average auto insurance premiums have dropped to their lowest level in two years
We highlight smart ways to further cut your expenses.
With the cost of policies declining over the last two years, drivers will be relieved that skyrocketing auto insurance premiums appear to be firmly behind them.
Compared to the last quarter of 2025, the first three months of 2025 saw a 7% decrease in the cost of auto insurance, Go said. In contrast.
This indicates that the average annual premium for auto insurance has decreased to 418, the lowest level since the beginning of 2023.
The story comes after a spike in auto insurance rates in 2023 as the cost of auto repairs increased due to high inflation. As more people began to travel after the pandemic, the number of claims also rose, prompting insurers to raise their rates.
Why is auto insurance becoming less expensive?
The recent slowdown in inflation is one factor contributing to the decrease in auto insurance rates.
The consulting firm Pearson Ham Group reports that the largest decreases in auto insurance rates have been experienced by young and senior drivers.
The type of policy you purchase and other variables, such as your residence and employment, will determine the cost. For instance, go if you're a London resident. Compared to Wales, where the median cost is 343 pounds, the average annual cost of auto insurance is 598 pounds, which is about 74% more expensive.
The comparison website's car insurance spokesperson, Tom Banks, explains: "This price difference is often due to the fact that if you live in London, you have a higher chance of having your car stolen or damaged, and you also have a higher chance of having to park it on the street rather than safely locked away in a garage.
Go. The top three occupations with the lowest average annual premiums for auto insurance, according to Compare, are domestic workers (293), gardeners (290), and postmen (278).
The general trend seems to be downward, which is good news for drivers, Banks continues. "It's great to see that car insurance prices have dropped," he says.
Car insurance premiums skyrocketed the following year, but many drivers still have to pay more than they did in 2022, even with the decline in costs.
Last month, car taxes also increased, with some rates doubling and owners of electric vehicles who had previously been exempt from the levy now required to pay it.
We've compiled a list of strategies to lower your auto insurance premium in light of this, which could result in annual savings of hundreds of pounds.
1. Select an appropriate level of cover
Driving in the UK requires auto insurance, though the coverage varies. You might be able to get a better deal with a different type of coverage depending on your needs, but it's crucial to recognize what kind of coverage you require. An outline of the definitions of insurance coverage is provided here.
Comprehensive: The greatest level of coverage offered is comprehensive auto insurance. The insurer should support you in the event of an issue because a comprehensive policy covers you, your vehicle, other people, and their property. Third-party, fire, and theft: Unlike comprehensive coverage, this type of policy won't shield you or your vehicle in an accident that was your fault. Nevertheless, it will protect you against theft, attempted theft, and fire damage, as the name implies. In addition to passengers, the policy covers any individuals or property that might be impacted by an accident for which you bear responsibility. Third-party: This is the bare minimum of coverage needed to drive in the UK. Injuries to other people and their property, as well as damage to other cars, are covered by this type of coverage, but you cannot claim for any damage to your own vehicle or person. You should carefully compare the costs of each type of coverage; don't assume that third-party insurance will be the least expensive; on the contrary, it may be the most.
As stated by Go. When compared to a comprehensive policy, the average cost of a third-party only insurance policy is 559 37% higher.
Numerous variables affect the cost of coverage, including your age, occupation, place of residence, and the kind of vehicle you drive. Accordingly, those who have third-party insurance are more likely to file claims because they usually drive older vehicles, are younger drivers, or have a history of moving violations.
Additionally, be on the lookout for insurers who offer "stripped back" coverage in an effort to maintain their position at the top of price comparison tables. Although these policies lack many features found in regular auto insurance policies, they usually offer more coverage than basic third-party, fire, and theft policies. Common exclusions include courtesy cars, windscreen protection, replacement of stolen keys, and the uninsured driver promise, which guarantees the reinstatement of no-claims discounts and the reimbursement of excess in the event of an accident involving an uninsured driver.
Comprehensive coverage may therefore provide you with better protection at a lower cost if you have a car that you are eager to maintain.
2. Think about purchasing black box insurance
Often linked to younger and inexperienced drivers, black box policies, also known as telematics, involve your insurer installing a tiny gadget on your vehicle.
The black box, which is frequently used in combination with an app, tracks your driving habits, such as your speed, how hard you brake, and the time of day you typically travel.
The idea is to reduce road hazards by encouraging drivers to exercise greater caution. The more cautious you are, the lower your premiums will be for these policies, which tend to get cheaper over time.
3. Preserve your no-claims incentive
By maximizing your no-claims discount, you can reduce your auto insurance premiums by about 60%. For each year that you do not file a claim, your insurer will deduct this amount from your payout.
Accidents do happen, of course, and accruing the bonus can take a while. For this reason, many insurance companies offer to pay a small additional premium in exchange for protecting your no-claims bonus.
4. Pay in full to avoid interest
It is nearly always less expensive to pay for your auto insurance once a year rather than over the course of a year.
You are effectively taking out a loan from the insurer when you agree to pay in monthly installments, with interest added. Although the amount you can save by paying it off in full varies from provider to provider, you can anticipate saving between 10 and 20 percent.
The director of policy and advocacy at Which?, Rocio Concha, stated: "Drivers who choose to pay monthly rather than in full for annual coverage may wind up paying hundreds of pounds more over the course of a year because of the high interest rates required on payments.
5. Avoid auto-renewing
Choosing to auto-renew will probably result in you losing out on a discount. By renewing with the same insurer, you may save time and hassle, but you also lose the chance to compare rates and offers.
You are free to shop around and move to a different insurance provider as long as your current policy is about to expire. It's also worthwhile to check to see if your present supplier will match an offer from another source or give you a deal.
On comparison websites like Go, you can look around for the best deals. Compare the market, MoneySuperMarket, or Compare.
6. Spend less on unnecessary extras
Certain policies come with extras that you might not need but are still paying for. For example, you might no longer require windscreen or European coverage, two popular add-ons that can raise the cost of your policy.
When it comes to renewing your coverage, consider what you are paying for and eliminate any unnecessary extras.
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Or find a better deal elsewhere. Likewise, check to see if you can find a better deal elsewhere on your add-ons. For instance, you can purchase a particular policy that will pay for windshield damage. Compared to purchasing it in conjunction with your auto insurance, this might be less expensive.
The same holds true for extras like courtesy car insurance and legal support. Shopping around to see if there is a better deal is well worth it.
8. Increase the security of your vehicle
You may be able to get a better rate from insurers if you make your car more secure.
The cost of installing security updates may be justified if your insurer decides to lower your premiums because steering locks and immobilizers are two of the most popular methods of discouraging thieves.
The cost of your auto insurance also depends on where you live. This covers the city in which you reside as well as your parking location. Because garages and driveways are thought to be safer locations to park a car, your insurance will probably go down a little if you have one.
Keep in mind that you should always tell your insurance company the truth about where you live. You run the risk of your cover being void if you give false information.
9. Enroll in a sophisticated driving course
Drivers can elect to enroll in Pass Plus, which some insurance companies offer as a way to reduce your premiums. Despite being primarily designed for young, inexperienced drivers, anyone can benefit from the course and the possible savings. When determining how much your coverage will cost, some insurers will consider the course, but not all will. To find out whether the cost of the course will outweigh any discounts you receive, it is worthwhile to contact your provider.
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Renew when it's appropriate. According to Go data, 26 days prior to the policy's expiration date is the ideal time to renew your policy. In contrast. The price tends to go up as your renewal date approaches, which is the reason.
The ability of insurers to alter their rates at any time and for seemingly no reason is another reason why it's a good idea to lock in a price in advance. One day, you might be looking at a price comparison website, find a good deal, and then return a few days later to claim it only to discover that the price has increased.
To prevent this, be ready to seize a bargain as soon as you see it because it may end up saving you money later.
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If at all possible, drive less. You will be questioned about your average annual mileage when you apply for auto insurance. This is because driving more frequently increases your risk of getting into an accident, according to statistics. You should be able to cut expenses if you can walk shorter distances or take public transportation to cut down on your mileage.
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Picking your job title should be done carefully. The cost of your insurance is significantly influenced by the job title you list on your application. For instance, studies conducted by Vanarama, a division of the Auto Trader group, reveal that traders and mechanics earn significantly more than financial analysts, accountants, and chefs.
When recording this information, it's crucial to be truthful because providing false information could render your insurance void. However, it's worth seeing if choosing one over the other affects the cost of your premium if there are job descriptions that are extremely similar and do fit your role.
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Include an additional driver in your policy. Adding a second driver to your auto insurance policy may occasionally result in lower premiums. If you have added an older or more experienced driver to your policy and you are a young driver, student, or recent driver who passed your driving test, this is particularly true. Additionally, you can rest easy knowing that your vehicle is covered in the event of an emergency while someone else is operating it, and the other driver will benefit from any additional coverage you have on your policy, like breakdown coverage.
But, in an attempt to obtain less expensive insurance, resist the urge to designate someone as the primary driver of a car (typically a more skilled driver) when someone else will be using it more frequently. This is referred to as "car insurance fronting" and is prohibited.
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Pick your vehicle wisely. Each vehicle belongs to one of 50 insurance groups that insurers use to determine the cost of your premium. Your car will therefore be grouped under low insurance with lower premiums if it has a small engine. An automobile's insurance group increases with its cost.
Your driving record is a major factor in determining quotes, and it's not the only determinant of premiums where you live. Before purchasing a new vehicle, it is worthwhile to find out which auto insurance group it is covered by.
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Should I make changes or not? Notifying your insurer of any modifications to your vehicle may result in additional costs for your policy. However, the type of modification you make will determine this.
Any significant changes to your style, sound, or performance can significantly increase your insurance premiums, even though minor upgrades like roof bars might not have an effect on the cost. Imagine big spoilers or exhausts. They may also increase the value of your vehicle, increase the cost of repairs, and increase the likelihood that it will be stolen or vandalized.
You should inform your insurance company if you make any modifications to your vehicle. In this manner, you have the appropriate amount of coverage and the quote you receive reflects the changes.
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Be wary of additional costs. Administrative fees can be assessed by auto insurers for a variety of reasons, including moving, changing jobs, getting married, terminating your policy, or making changes to your vehicle. This cost, which is additional to your premium, may reach £50.
Please notify your insurer of any significant life changes; otherwise, you run the risk of incurring excessive fees or possibly having your policy revoked.
These administrative costs may be covered by certain policies at a marginally higher premium. It is worthwhile to determine whether this increase will be more cost-effective for you than having to pay a higher fee to modify a policy that does not include this. See exactly what you're getting into by reading the terms and conditions.
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Take pay-as-you-go insurance into account. Young or infrequent drivers who cannot afford high premiums can find affordable insurance coverage with pay-as-you-go auto insurance.
Investigating this kind of coverage could be worthwhile if your annual mileage is less than 7,000 miles. Three different kinds of coverage are available.
Pay-per-mile: Under this kind of auto insurance, you are billed for each mile you travel. After you pay a base rate for your insurance coverage, your monthly mileage is tracked. For people who don't drive frequently, it may end up being less expensive. Telematics: Often referred to as pay how you drive insurance or black box insurance, this type of insurance tracks your driving speed, braking speed, and level of safety using a tiny GPS device. Your chances of receiving better insurance, discounts, or cashback increase with your driving performance. Similar to pay-per-mile, pay-per-hour charges you according to the amount of time you spend driving rather than the number of miles you travel. A fixed monthly or annual fee will be assessed to protect your vehicle from damage; subsequent payments will be determined by your mileage.
Not everyone is a good fit for this style of cover. You might not be considered eligible for this kind of policy, for instance, if you frequently drive commercial vehicles or if you are a novice driver with subpar driving skills.
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Use caution when driving. Any moving violations that result in penalty points on your driver's license must be reported to your insurance provider. Your premiums will rise in tandem with your points. You will lose your driving privileges and your insurance will go up once you accumulate 12 points in three years. However, keep in mind that some insurance providers will not provide you with any coverage at all because they consider you to be a higher-risk driver.
Notably, accruing penalty points on your license will not have an immediate impact on your no-claims bonus. Only if you file a claim or someone else files a claim against you can you forfeit it. In that scenario, your discount usually decreases by two or three years if your insurer pays out.
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