Car insurance costs set to hit record levels as average premium reaches £815

Car insurance costs set to hit record levels as average premium reaches £815
Car insurance costs set to hit record levels as average premium reaches £815

The average cost of car insurance has hit a two-year high and industry observers are warning it could reach record levels by the end of the year.

Prices rose at their fastest rate for two years in 2019, increasing to an average of £815 per year.

That is the highest since the first quarter of 2017 and nearing the all-time high of £858 seen in the second quarter of 2011. Experts are predicting that if the rate of growth continues, policy costs could reach a new high by the end of 2020.

According to the Confused.com car insurance price index, which compiles data from more than six million quotes each quarter, 2019 was a volatile year, with the average cost of insurance rising and falling across the first nine months before a significant jump in the final quarter.

The four per cent rise from October to December is the biggest quarterly increase in more than two years and if such growth carries on the average policy prices could be approaching £900 in the coming year.

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Gender and age gaps

Female drivers and younger motorists experienced some of the worst rises at the end of the year, according to the figures.

Female drivers are now paying £48 (seven per cent) more than 12 months ago. This means they can now expect to pay £767, on average, still £87 less than the average male driver.

Young drivers and women were among those hit with the biggest price rises (Photo: Shutterstock)

The youngest drivers, aged 17-19, continue to face the highest premiums, with 18-year-olds paying the most, at £2,130. However, while bills rose seven per cent for 17-19-year-olds, it was drivers in the next age bracket, specifically 24-year-olds, who saw the sharpest rise of all. A nine per cent increase took their average bills to £1,259.

While prices rose across the country, the data exposes significant regional differences, with drivers in some areas paying nearly a fifth more compared to 2018.

Read more: Nine ways to reduce your car insurance costs

Motorists in Shetland were hit by an average rise of 17 per cent, with prices shooting to £915 by the end of the year. A similar increase (14 per cent) left drivers in West Central London paying an average of £1,371 for their car insurance.

Louise O’Shea, CEO at Confused.com commented: “It’s January, the month to save money and re-evaluate our spending. But the bad news is car insurance costs are increasing. And, as drivers, this is something we can’t avoid. If costs continue to accelerate at this pace, we could be paying record prices by the end of the year.

“Shopping around is key to saving on car insurance. And even if your renewal price is cheaper, or the same, it’s likely there will be another insurer out there willing to offer a better price.”

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