Car insurance costs jump £68 a year as drivers face growing financial pressure
Average bill climbs to £688 per year amid soaring fuel and car prices
The average car insurance premium has risen by £68 over the last year, according to new figures.
Data from insurance comparison site Compare The Market reveals that after falling in early 2021, premiums have risen to the highest levels since late 2020, when the average price was £724.
The figures for the first three months of 2022 show that average prices generated by searches on the site have risen from £620 to £688 but the gap between the cheapest policies has narrowed. While the cheapest policies have also increased in cost, the year-on-year rise is £42 - from £568 from £526 - compared with a £120 gap in early 2021.
Younger drivers, once again, faced tougher conditions, with the average premium for those under 25 rising by £163 to £1,225 per year.
The Association of British insurers has blamed a number of factors for the rise in costs, including a sharp rise in second-hand car prices, which have grown by around a third since early 2021. According to data from Auto Trader, the average used car is now worth £4,400 more than an equivalent model two years ago.
The ABI also highlighted a growing accident rate as traffic levels returned to normal following the end of pandemic travel curbs, and the rising cost of repairs as cars become more complicated and expensive to fix.
Alex Hasty, director at Compare The Market, said that the narrowing gap between cheapests policies showed that drivers could still save money as other motoring costs continue to rise.
He commented: "Drivers will be disappointed that motor premiums are less affordable than in previous years as household budgets continue to be impacted by rising fuel and energy costs. Insurance prices began to increase rapidly at the end of last year and premiums have remained high in the first three months of 2022. This is concerning as lots of motorists are already struggling with the cost of driving.
"Switching to a cheaper deal continues to be one of the best ways to cut the cost of car insurance, with our research showing drivers could save an average of £120. Shopping around when your policy comes up for renewal can significantly benefit young motorists who face the biggest increase in premiums. Drivers below the age of 25 could save a substantial £257 by switching."