It is a legal requirement in the UK to ensure your vehicle is suitably insured. It is essential to ensure that you have the correct car insurance for your circumstances.
The requirement for insuring your vehicle does not exclude using cash to purchase a car or whether or not you are a well-seasoned and cautious driver. Leaving your vehicle uninsured may leave you financially and legally in a high-risk position, not to mention the risk of 3rd party damage to your vehicle. If you suffer loss or damage to your vehicle, you will not be covered to claim compensation.
Car insurance, including temporary car insurance for short-term vehicle use or learner driver insurance, is a legal requirement and a great piece of mind, should the unpredictable happen.
We’ve explored everything you need to know about some frequently asked questions regarding car insurance in the UK. This guide will highlight what affects car insurance prices, the danger of uninsured drivers and some interesting UK statistics to help clear up any particular query you may have.
- The average cost of car insurance in 2022
- Male drivers pay more than female drivers for car insurance premiums
- London is the most expensive city for car insurance in the UK
- Over 65s are the cheapest age group to insure
- Younger drivers pay the most
- 2.1 million claims were settled in the UK in 2020
- £8.3 billion was paid out on car insurance claims in 2020
- The average payout for a claim in 2021 was £5,349
- London has the highest average cost per claim
- The East of England experienced the highest rise in claims inflation
- 5% of drivers say they would never claim on their car insurance
- There are an estimated 1 million uninsured drivers in the UK
- Uninsured drivers account for over 26,000 accidents every year
- The fixed penalty for driving without insurance is £300 and 6 points off a license
- An average of 60% of people buy insurance online every year
- 975,000 drivers opt for black box insurance
- Black box policies are cheaper for young adult drivers
- Most UK drivers choose fully comprehensive car insurance
- The UK car insurance industry is the largest in Europe and the fourth largest in the world
- Gross written premiums (GWP) expected to rise by 18% between 2020 and 2025
Car insurance rates are at their highest in 2 years, having increased by 6% (£32) during the last 12 months, with UK motorists now paying an average premium of £554 per year.
While both men and women experienced an increase in the cost of their car insurance, male drivers continue to pay the most out of every demographic. Male drivers pay an average of £591, while female drivers pay an average of £492 for their car insurance premiums.
Location is one of the most critical factors that determine your car insurance premium. Living in a big city or town with more cars on the roads means more motor vehicle accidents and more insurance claims.
Londoners currently pay the most expensive premiums, with an average car insurance premium of £608.
Another factor that significantly affects the cost of insurance premiums is a driver’s age. The latest data on average car insurance cost by age in the UK show drivers under 25 pay twice as much as those aged 50 or over.
Drivers between 65 and 70 pay the lowest average annual premiums of just £279 for their car insurance, just under a third of the average price paid by drivers 18-20 years old.
Young drivers have much higher car insurance costs than older, more experienced drivers. Younger drivers still pay almost triple the national average premium: many expect to pay £1,000+ for their car insurance.
The latest figures show drivers aged 18 pay £1,453 for their policies. Meanwhile, drivers aged 32 saw a 3% reduction in their premiums compared to last quarter (Q1 2022) and now pay £692 on average.
Our article asking ‘What’s the cheapest car for a young driver to insure?’ may be able to assist in getting insurance costs down.
As the UK’s Covid-19 lockdown kept many cars idle and roads empty, the number of insurance claims made on motor insurance policies fell sharply, with 2.1 million claims settled, down 19% from the previous year.
The number of claims settled also experienced a drop of 13% in the previous quarter (Q3) to 468,000.
Due to the impact of the national lockdown measures, total payouts were reduced by 6% from the previous year.
Although payouts experienced a reduction, the overall average value of a claim paid went up by 17%, from £3,400 in 2019 to £4,000. This rise reflected increased average personal injury and vehicle repair cost claims.
According to WTW’s most recent Claim Metrics benchmarking information, motor claims payout inflation increased by more than 6% in 2021 – which took the average cost per claim to £5,349.
The over 6% increase is significantly higher than the previous year (2020), which saw a general inflation rate of 2.1%. Reports say a sharp rise is to be expected in 2022.
Taking over from the North West, London has the highest average cost per claim in 2021 at £6,189.
Between 2019 and 2021, England’s eastern counties faced the sharpest climb in claims inflation, increasing by 23.6%.
According to Finder’s survey research, the average British driver wouldn’t claim for damage costing under £667. Over 11% of drivers wouldn’t claim for anything under £1,000, including 2% who would pay up to £5,000 worth of damages themselves.
On the other hand, almost 8% of drivers would claim for any damages worth up to £100 – included are the 2% who would claim for any damages, no matter how small the repair cost.
According to the Motor Insurers Bureau scheme (MIB), there are a whopping 1 million uninsured drivers on UK roads, which amounts to around 4% of all motorists in the country.
Whilst this statistic is down by almost half of the figures seen in 2004, it is still a shockingly high number that compares poorly with other European countries.
According to MIB, more than 26,000 people are injured, and more than 130 people die annually in accidents caused by uninsured drivers, equivalent to one person in the UK being injured every 20 minutes.
In the UK, driving a vehicle on the road or in a public place is illegal without at least 3rd party insurance. If caught driving a vehicle that is not insured, you could be fined £300 and 6 penalty points off your license.
If the case goes to court, drivers can face an unlimited fine and a driving ban. Moreover, uninsured vehicles can be seized and, in some cases, destroyed. In 2020, 100,983 drivers were caught driving without insurance, and 102,387 vehicles were seized.
A nationally representative online survey of UK consumers found that approximately 60% of respondents had purchased motor insurance online.
The lowest percentage (around 44%) of respondents who had purchased car insurance online belonged to the 18 to 24 age group. In contrast, the highest percentage (64%) belongs to the age group of 55 to 64.
The British Insurance Brokers’ Association found that 975,000 drivers were using black boxes to help calculate their insurance premiums in 2018 – up from 12,000 in 2009.
Black box policies are cheaper for 78% of drivers aged 17-20 and 69% of drivers aged 21-24 compared to standard car insurance.
For drivers 17-20 years old, premiums can drop by as much as £1,137 annually if they opt for black box insurance.
73% of UK drivers opt for fully comprehensive car insurance, as it offers the best protection against injury or financial loss for the policyholder, their passengers, and third parties.
In 2019, the UK car insurance market generated 21.3 billion euros in car insurance premiums, making it the third largest after Germany and France. The UK accounted for over 14.448% of Europe’s gross written car insurance premiums in the same year.
A report by Research and Markets stated that in 2019, the UK car insurance market generated just over £14.2 billion in GWP – up by 2% from 2018.
Between 2020 and 2025, industry experts predict car insurance GWP will increase to £15 billion (18%), most noticeably from 2020 to 2022, with a rise of over 10%, before slowing down by around 2% per annum for premiums.
There are many different factors that car insurance companies and providers take into account when calculating your insurance premiums. Some factors include your age, postcode, profession, mileage, driving history, vehicle type, no claims bonus, and policy history, to name a few.
In the UK, younger drivers (those in their 20s), on average, pay more for their car insurance than older drivers. The average cost of car insurance for younger drivers is the highest out of all age ranges, with an average of £851.
Roughly 20 million (75%) UK households have motor insurance.