Car insurance prices have finally taken a big dip, the biggest drop since records began.
New data shows the average annual premium has fallen by £60 in the past year, a 9.6% drop, the sharpest fall since records started in 2013.
Between April and June this year, drivers were paying around £562 a year for cover, compared to £622 in the same period of 2024, according to the Association of British Insurers (ABI). Adjusted for inflation, that’s an £81 saving.
It’s a big change after years of constant price hikes caused by rising repair costs and supply chain issues. Premiums hit a record high of £635 in early 2024, but now they’ve dipped back under £600 as inflation cools and insurers fight for customers against a few mega-players in the market.
But don’t get too excited just yet. Prices are still way higher than during the pandemic, when fewer cars on the road meant fewer accidents and much cheaper cover.
The ABI warns insurers are still under pressure. Between April and June, 669,000 claims were settled, up 5% compared to the first three months of this year. The total cost of those claims hit £2.1 billion, £100 million more than earlier in 2025.
High repair costs are a big driver here, and modern cars aren’t helping. Advanced sensors, electronics, and tech-packed bumpers make fixes more expensive and time-consuming. Add in rising labour costs, component shortages, and a nationwide lack of skilled repairers, and it’s clear why bills are climbing.
ABI’s Mark Shepherd says it’s good news that premiums are falling, but warns: “With the cost of cover still weighing on household finances, we must not lose momentum in tackling the persistent pressures driving up claims.
"That’s why we continue to urge the Government to support the industry by investing in training for the repair sector, improving road safety, and holding firm against any rise in insurance premium tax in the autumn Budget."
