Motorists have been handed a rare bit of positive news as new research reveals a key expense has dipped for the first time in two years. According to fresh Premium Drivers research from Compare the Market, the average cost of car insurance has seen a year-on-year decrease of £221 (23%).
The average premium dropped to £729 in December 2024, down from £950 in December 2023, marking the lowest monthly average premium since May 2023 when it stood at £718, the researchers noted.
The decline in average premiums could be partly attributed to a stabilisation in claim costs for insurers as inflation has slowed in recent months, the experts suggest. However, the average premium still remains £105 (17%) pricier than in December 2022 (£624).
The fall in car insurance costs has been less significant for older drivers compared to younger age groups. Motorists aged 80 or above have seen their average premium drop by £61. Meanwhile, young drivers under 25 have experienced the most substantial decrease in average premiums, with the cost of car insurance for this group falling by £425 year-on-year to £1,577, reports Bristol Live.
Across the UK, drivers in London have seen the most significant drop in average car insurance premiums – down by £370 year-on-year. However, motorists in the capital typically face the highest car insurance costs at £1,202. In contrast, drivers in Wales have only seen the average cost of car insurance fall by £62 from the previous year, with the average premium in this country standing at £620.
The research also highlighted that a car’s transmission can significantly impact its insurance cost. The average premium for an automatic car is £860 in December 2024, which is £217 more than the average for a manual car in the same month (£643).
Automatic cars are generally pricier to insure as they tend to be more expensive to purchase than manuals, and automatic gearboxes are more complex than manual ones, so they typically cost more to replace. The researchers noted that the substantial decline in car insurance premiums year-on-year means drivers who shop around for car insurance rather than automatically renewing could find a great deal.
Even if a motorist’s renewal quote is lower than last year, one of the surest ways to pinch pennies on your car insurance is to do an online comparison first. Drivers could stand to save as much as £510 on their car insurance via Compare the Market.
Julie Daniels, the motor insurance guru at Compare the Market, said: “Many motorists will be delighted that the cost of car insurance has declined significantly compared to last year. As household budgets experience wider pressures, cheaper car insurance will be welcome news following the steep insurance price increases seen in previous years.
“One specific tip I’d give any motorist looking to save money on their car insurance is that it’s still important to compare car insurance online before renewing with your existing provider. While some drivers may see their renewal price drop, by taking that action to shop around, you’ll see how much you could save by switching.”
Regarding the data source, all insurance premium figures come directly from Compare the Market. A majority, 51% of Compare the Market users, were quoted amounts lower than those stated for December 2023 and December 2024, respectively.
From independent online research by Consumer Intelligence during December 2024, it was found that 51% of consumers could achieve a £510 saving on their car insurance through using Compare the Market.