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Car insurance prices drop for first time in 2 years

By Mathilda Bartholomew | August 8, 2024

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Car insurance prices drop for first time in 2 years

Car insurance prices drop for first time in 2 years

For the first time in two years, car insurance prices dropped in the second quarter of 2024. However, ethnic minorities and people with high levels of debt are still paying more than average for their premiums.

Earlier this year, Citizens Advice (CA) told the Transport Select Committee that many drivers are being unfairly charged higher-than-average car insurance rates. This issue, often called the “insurance postcode lottery,” has led to people living in areas with more people of color consistently being quoted higher premiums. CA's latest report found that even in areas with similar crime rates, residents in predominantly non-white neighborhoods were charged an average of £307 more per year for car insurance compared to those in white areas.

It’s not just ethnic minorities facing unfair pricing. CA also found that people in significant debt are typically charged more for car insurance—about 23% higher on average. For those in debt who are also from ethnic minority groups, this increase jumps to 71%.

CA supported the Labour Party’s call for the Financial Conduct Authority to investigate this unfair targeting by car insurance companies, especially “with new evidence showing that car insurance costs are still higher for people in debt and people of colour, it is vital that [an investigation] happens promptly.”

Despite these challenges, there are signs that things might be improving for everyone. The Association of British Insurers (ABI) reported that the average car insurance price dropped by 2% in the second quarter of 2024, the first decrease since 2022. This means the average price fell by £13 between April and June, bringing the yearly premium to about £635.

The ABI noted that this price drop occurred despite rising repair costs and record-high average costs of items stolen from vehicles, which now stand at £3,100. Mervyn Skeet, the ABI’s director general, commented, "After a very challenging period for insurers and customers alike, we’re encouraged to see an easing of increases to motor insurance premiums as claims costs stabilise.”

How much are you paying for your car insurance? Let us know in the comments below!

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