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Breaking down the average car insurance cost

Breaking down the average car insurance cost
Source: Getty Images

If you drive a car, you’ll need car insurance and that’s a fact. And if it feels like an expense that just keeps on rising – you wouldn’t be far from the truth. To work out why car cover can be so pricy, here’s what determines the average car insurance cost.

What is the average car insurance cost?

Statistics from comparison site MoneySuperMarket reveal the average comprehensive insurance policy stands at £485. The figure represents a 4% drop in prices compared to the last quarter of 2019. While that’s good news for some car owners, it’s still a slight (1%) increase year on year.

Car owners opting for a third-party, fire and theft (TPFT) policy saw premiums rise 4% from £839 in the Q1 2019 to £872 in Q1 2020.

Meanwhile third-party only (TPO) policyholders experienced the most marked increase of all. A year-on-year rise of almost 13%, with policies costing an eye-watering £1,422 in Q1 2020. 

What factors affect the average car insurance cost?

Insurance is all about risk and the likelihood of you making a claim. The higher the risk, the more you can expect to pay. Sadly, not all of the factors affecting cost are within your control. Insurers will consider:

Your age

Data collated by road safety charity Brake, shows that young drivers aged 17-19 are involved in 9% of fatal and serious accidents. Yet they only represent 1.5% of licence holders. As a result, drivers aged 17-24 can expect to pay higher than average premiums – around £975 for comprehensive cover.  

Your job

Using trends in data, insurers can see the number of claims made by people in various occupations. More claims made by a particular category can lead to higher than average premiums.

Your location

Insurers consider the number of claims made in your area. The more claims there are, the more you can expect to pay. Based on that, it’s no surprise that you’re likely to pay more if you live in a busy city than you are in a sleepy village.

Your car

The more desirable and powerful your car is, the more you can expect to pay. This is mainly because your vehicle could be a greater target for thieves. It’s also because the fancier the spec, the higher repair costs are likely to be. The same can be said for modifications like tinted windows and supercharging.

Your no claims bonus

A no claims bonus (NCB) or no claims discount (NCD) is a percentage off your premium. You earn one year’s NCB for every 12 months you drive without making an insurance claim. Insurers set their own NCB values, but you could earn discounts up to a maximum of 75%.


As far as insurers are concerned, the holy grail of security is being able to store your car in a locked garage overnight. Alternatively, a private driveway is the next best thing. If you need to park your car on the street, insurers will need to consider the increased risk of theft or damage.

Mileage and use

The more you drive your car, the greater the risk of an accident, which is reflected in your premium. It might be pessimistic but it highlights the reality of regularly commuting by car compared to using it on odd occasions.

Driving history

If you’ve recently made a claim (within the last five years), this can negatively impact the cost of your car cover. Particularly if you were considered at fault.


This is the amount you pay towards an insurance claim. The higher the excess, the lower your overall premium is likely to be. Remember, you’ll need to pay your excess for a claim to go ahead so it still needs to be affordable.

Type of policy

Although third-party only (TPO) policies used to be the cheaper choice, that’s not always the case now. Traditionally favoured by younger drivers, insurers found these policies had higher claim rates. This led to steady price rises. This now means that comprehensive cover is sometimes less expensive than a TPO policy.

Insurance premium tax (IPT)

Almost all insurance policies are charged IPT. It’s usually included in the price, so you’re unlikely to have noticed it. But IPT has risen every year since it was introduced, from 2.5% in 1994 to the current rate of 12%.

Discount rate

This helps insurers work out how much personal injury compensation to give out, expressed as a percentage and set by government. The lower the percentage, the higher the amount of compensation. The discount rate used to be 2.5% but it was slashed to minus 0.25%, which means bigger compensation payouts – a cost passed on to policyholders.

Driving down the average car insurance cost

Using a price comparison website is one of the simplest ways to find the best deals on car cover. Just don’t forget to look at the likes of Direct Line, Aviva and NFU Mutual who don’t feature on comparison sites. 

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