These are the cheapest (and most expensive) areas for car insurance in the UK

Car insurance costs in the UK vary widely from one postcode to the next. Here are the cheapest and most expensive areas for premiums.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Sale agent deal to car loan contract with customer.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The amount you pay for your car insurance is determined by several factors. These include your age, the car you drive, your occupation, your annual mileage and where you park your car at night. But did you know that your postcode can also significantly affect your premiums?

Recent research by Compare the Market shows that car insurance costs in different areas across the UK can vary significantly, with drivers in some of the most expensive areas paying up to four times more than their counterparts in the cheapest postcodes. Here is the scoop.

[top_pitch]

Which are the cheapest areas for car insurance in the UK?

Data from Compare the Market reveals that drivers in the Isles of Scilly spend the least on car insurance, paying an average of £308.76 a year. Drivers in West Devon and the Isle of Wight also enjoy relatively cheap insurance premiums, only paying an average of £412.15 and £413.01 respectively.

South Hams and Teignbridge round out the top five places in the UK for cheap car insurance, with drivers paying £423.08 and £424.24, respectively.

Here is the complete list of the top ten cheapest places in the UK for car insurance.

Rank

Local authority

Average car insurance quote

1

Isles of Scilly

£308.76

2

West Devon

£412.15

3

Isle of Wight

£413.01

4

South Hams

£423.08

5

Teignbridge

£424.24

6

Berwick-Upon-Tweed

£429.53

7

Stroud

£426.64

8

Carrick

£433.44

9

East Devon

£435.72

10

Mid Devon

£436.86

 

Which are the most expensive areas for car insurance?

London boroughs dominate the list of the most expensive postcodes for car insurance.

According to the data, Newham is the most costly postcode in the UK for car insurance, with drivers spending an average of £1337.74 each year.

Other expensive areas include Tower Hamlets and Haringey, where drivers have to pay £1,311.73 and £1,232.87 respectively.

Here are the top 10 most expensive areas for car insurance in the UK.

Rank

Local authority

Average car insurance quote

1

Newham

£1,337.74

2

Tower Hamlets

£1,311.73

3

Haringey

£1,232.87

4

Westminster

£1,227.61

5

Brent

£1,206.32

6

Hackney

£1,205.04

7

Kensington & Chelsea

£1,154.36

8

Barking & Dagenham

£1,151.95

9

Manchester

£1,120.87

10

Redbridge

£1,119.56

 

[middle_pitch]

Why is there such a large difference in premiums across different areas?

According to This is Money, the huge disparity between car insurance costs across the country is mostly due to the varying risk profiles that insurers judge for pricing.

For example, the majority of accidents happen in towns and large cities. This translates to a higher risk profile, and drivers of cars in these areas are consequently likely to pay higher premiums.

Similarly, the rate of crime, including car theft, is higher in urban areas than in rural areas, meaning that drivers in rural areas are likely to pay lower premiums.

How can you cut your car insurance costs?

Even if you live in an area where car insurance costs are not exactly the cheapest, there are ways to cut costs.

Ultimately, the best way to make sure that you are not paying more than you need to on your car insurance is to shop around and compare different quotes. An easy way to do this is using car insurance comparison sites like MoneySuperMarket and Confused.com.

When comparing quotes, keep in mind that the cheapest option isn’t always the best. You shouldn’t take out a policy based on price alone. Make sure that you’ve done your homework on any policy that has piqued your interest to confirm that it covers everything you want and that the provider will actually pay out when you need them to.

Meanwhile, here are other ways to potentially cut your car insurance costs:

  • Limit your annual mileage
  • Pay for your insurance annually (to avoid interest charges)
  • Increase your voluntary excess
  • Add a second low-risk driver to your policy
  • Go for black box insurance, especially if you are a young driver

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »