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Having car insurance ensures you are covered financially if the worst were to happen to your car. Such incidents could involve damage from an accident, theft, vandalisation and fire damage. Car insurance means you won't have to dig into your pocket to pay for potentially huge repair or replacement costs.
Car insurance is a legal requirement for cars driving on public roads. You will be heavily penalised if you are found to be driving without insurance. The minimum level of coverage you must legally have is third-party car insurance. Third-party insurance covers the damage to another person's car, for example, in a collision accident, but provides limited cover for your vehicle.
Car insurance is either made up of an annual or monthly premium. Annual premiums are paid in a single lump sum when a policy is purchased; monthly premiums require a deposit and a monthly direct debit. Many factors come into play that will affect the cost of your car insurance. It needn't cost the earth when you take the time to compare premiums.
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Car insurance can be a significant expense, and it is essential to compare different companies to find the cheapest option. We’ve compiled a list of what the UK considers the top 10 most affordable car insurance companies. Reviewing this guide will likely help you find which companies are most popular in the UK.
It is essential to look for the cheapest car insurance quote. However, it is also crucial to consider how comprehensive the coverage is and what the insurance policy covers. Many discounts are available for drivers, especially if you have a black box or a “no-claims discount”.
At Insuro, we make getting a car insurance quote as simple as possible. Compare the top ten cheapest car companies list and find a policy that works for you. You could save up to £504* per year by comparing on Insuro.
The cheapest car insurance company in the UK can vary depending on several factors. Factors can include a driver’s age, location, driving history, and type of car. However, some of the UK’s most affordable car insurance companies, based on customer reviews and independent financial studies, include:
It is important to note that while these companies may be among the most affordable, the best car insurance companies will depend on individual circumstances. Therefore, many recommended comparing quotes from several companies. When comparing, consider coverage options, deductibles, and policy limits before purchasing insurance.
Here are 10 of the most prominent car insurance companies in the UK. These companies can often provide some of the more competitive quotes. The most suitable company for you will depend on your specific needs.
While the above may be regarded as the top 10 most reputable, with some of the cheapest car insurance companies in the UK based information available, it’s worth comparing all options.
There are over 100+ insurers you can choose from on Insuro. With results provided by SEOPA, this online car insurance comparison site enables you to find the ideal car insurance quote quickly.
Before comparing, why not review our comprehensive car insurance below?
Car insurance companies determine their prices based on the driver’s age, driving history, location, vehicle make and model, and more. Based on these factors, some drivers may be classified as riskier, leading to higher insurance premiums. Conversely, others may be regarded as lower risk, leading to lower premiums. Additionally, different insurance companies may use different methods to assess risk, leading to differences in pricing for the exact driver between companies.
Motor insurance companies in the UK, similar to those in other countries, generate income in two primary ways. Firstly, by collecting insurance premiums from their policyholders. The premium is the payment you offer to the insurance company to cover the risks of specific events such as accidents, theft, or fire through investments. Secondly, insurance companies allocate a part of the premium income they collect and invest it in various financial markets. They aim for a return on these investments, for which these returns cover the claims and costs to manage the business.
Significantly, only some of the premiums gathered result in claims payments. The insurance company applies statistical models to calculate the risk of insuring each policyholder, setting their premiums accordingly. In turn, this suggests that, in theory, insurance companies can accumulate more in premiums than they disburse, permitting them to make a profit.
Numerous reasons might lead a car insurance company in the UK to refuse to offer cover. One prevalent reason is an adverse driving history. If you’ve experienced many accidents or convictions for driving offences, an insurer might perceive you as a high risk and refuse to provide coverage. Another reason could be if the car to be insured is notably costly or powerful, enhancing the potential cost of any claim. Insurance companies may also decline to cover if you reside in an area with high vehicle crime rates or have had earlier policies cancelled due to non-payment or fraud.
Some car insurance companies opt not to be featured on comparison websites for various reasons. One reason could be the cost, as many comparison sites charge insurers a fee for each policy sold through their platform. Another reason could be that they think their policies are distinctive or complex and can’t be directly compared with policies offered by other insurers. In some instances, insurers prefer a direct relationship with their customers, which is best achieved by selling now rather than through comparison sites.
In the UK, car insurance companies might perform a ‘soft search’ on your credit score when you apply for a policy. A soft search won’t affect your credit rating. They do this to verify your identity and to get a broader understanding of your financial dependability. However, they don’t use your credit score to determine your insurance premium, as practised in some other countries.
Indeed, car insurance companies do check your mileage. Insurance companies track mileage because the distance you cover each year is one of the factors they use to estimate your risk level. The more miles you cover, the higher your chances of being in accidents. When you take out a policy, you’ll be requested to estimate your annual mileage, and it’s crucial to be as accurate as possible. Some insurers may corroborate this information through MOT records or in-car black box telematics devices.
Car insurance companies in the UK can automatically renew your policy. Policy documents, in particular, with the renewal policies’ terms and conditions, should be stipulated. The Financial Conduct Authority requires insurers to notify you before any renewal, typically between 21 and 28 days before your policy concludes. Notice periods allow you to shop around and compare car insurance quotes. You should contact your insurer if you prefer to keep your policy from renewing automatically.
Car insurance companies in the UK can access your driving history. They can see any penalty points you have, along with details of any accidents or convictions. They use this information to help assess the risk of insuring you. If you have a poor driving record, you’re likely to face higher insurance premiums, and in some cases, you might find it challenging to obtain insurance. Honesty about your driving history is vital when applying for insurance, as inaccuracies can lead to policy cancellations or claim rejections.
In the UK, several factors influence the rise in car insurance prices. Hypothetically, these might include:
Inflation erodes purchasing power, meaning the same amount of money buys fewer goods and services. For the insurance industry, inflation translates into higher repair costs, as the price of parts and labour increases, and potentially more significant payouts for personal injury claims due to increased medical costs. According to the Office for National Statistics, the UK experienced an inflation rate of 3.1% in the 12 months leading to September 2021. Inflation affects insurers’ costs and may also influence investment returns for those insurers with investment portfolios, potentially impacting premium prices.
The ABI (Association of British Insurers) reported that in 2020, 107,000 fraudulent insurance claims were detected in the UK, equating to one every five minutes, with a total value of £1.2 billion. This significant expenditure unavoidably impacts the premium prices for all policyholders to some extent as insurers seek to mitigate losses.
Repair costs have surged with more technologically advanced vehicles on the roads. The intricacy of newer models, laden with sophisticated technology and costly components, leads to higher repair bills, thus potentially inflating insurance claims costs and, by extension, premiums. More technology can mean more expensive cars, and with electric vehicles commanding higher prices than their diesel and petrol counterparts, it’s no surprise that premiums must increase to reflect this.
According to Statista, drivers aged between 17 and 24 in the UK have consistently faced the highest average premium costs for car insurance. Between the second quarter of 2018 and the second quarter of 2020, drivers in this age bracket were charged an average premium of over £1,000.
Conversely, drivers between 65 and 79 tend to experience the most affordable car insurance premiums. Statista reports that, during the same period, this age group was charged an average premium of under £500.
Always note that exact premium prices can fluctuate due to many factors and might differ between individual insurance providers.
Identifying the cheapest car insurance can be challenging due to variable factors like location, driving history, and vehicle type. Historically, companies like Admiral, Churchill, and Tesco Bank have been notable for offering competitively priced policies to various age demographics in the UK, but specifics can fluctuate. Consider obtaining several quotes and comparing them to find the most affordable option for your circumstances.
Balancing “best” and “cheapest” might point towards insurers like LV= or Direct Line, historically recognised for combining competitive pricing with robust customer service and comprehensive cover options in the UK. However, the “best” is subjective and depends on individual needs and experiences. Comparing quotes and reading reviews gives you a more tailored answer.
Consider whether your version of “best” encompasses one of the following, then tailor your search accordingly.
Generally, old cars are cheaper to insure than new ones. Older models often have lower market values and can be less expensive to repair or replace, reducing an insurer’s potential payout in the event of a claim. Conversely, new cars, especially those with advanced technology, can present higher premiums due to their elevated repair or replacement costs.
Fully comprehensive coverage policies, which typically include comprehensive, collision, and liability coverage, can vary significantly in price between insurers. Historically, companies like Admiral, Aviva, and LV= are known to offer competitive rates for full coverage in the UK. Still, comparing quotes from multiple providers is paramount to determining which company offers the most affordable full coverage for your situation. Always ensure that the policy aligns with your needs and provides adequate protection.
According to the ABI, the average price for comprehensive motor insurance in 2020 was £465, the lowest annual average since 2016. However, remember that this is an average across all age groups and various other factors; individual circumstances can cause significant variations in premium costs.
The ABI also highlighted that in 2020, 55,000 dishonest motor insurance claims worth £629 million, showcasing the significant impact of fraud on the insurance industry and, by extension, on premiums.
Remember that these figures indicate that the UK’s motor insurance sector is subject to various pressures. These include rising claim costs and fraud, which can influence premium pricing. It’s crucial to note that while these figures provide a snapshot, individual premiums can be affected by many factors, including vehicle type, usage, and driver demographics and history.
Car insurance is necessary for every UK driver, protecting against potential road mishaps. However, many motorists are often taken aback by unexpectedly high insurance premiums. So, why might your car insurance be pricier than you anticipated? Here are some common reasons:
Young drivers, typically under 25, often face higher insurance rates. Lack of experience on the road increases the risk of accidents, and insurers set premiums accordingly.
High-end, luxury cars or vehicles with powerful engines are more expensive to repair or replace. Thus, insuring them tends to be costlier. Similarly, cars with a history of being stolen might also attract higher premiums.
Your insurance premiums might be higher if you reside in an area with high crime rates, especially vehicle thefts or vandalism. Additionally, densely populated urban areas with heavy traffic might pose higher accident risks.
A clean driving record can be your ticket to lower premiums. But, if you’ve had previous claims, especially in the last five years, or any driving convictions, you’ll likely face higher insurance costs.
Comprehensive cover offers the most protection and generally costs more than third-party, fire, and theft policies. Adding optional extras like breakdown cover or legal protection can also increase your premium.
The more you drive, the higher the risk of an accident. If you cover many miles annually, expect your insurance cost to reflect that.
Cars without security features such as alarms or immobilisers are more prone to theft. Investing in security systems might bring down your insurance cost.
Some insurers might charge more if you pay your premium in monthly instalments rather than an annual lump sum.
Some professions are perceived as higher risk due to the hours they work, the amount they drive, or the value of the equipment they transport. For example, a DJ transporting expensive equipment late at night might face higher premiums.
The amount you’ll pay towards a claim (before the insurance kicks in) can influence your premium. A higher voluntary excess might reduce your annual compensation, but you’ll have to pay more in case of a claim.
Use comparison websites to compare quotes from different insurers.
Higher deductibles usually mean lower premiums, but ensure you can afford the deductible.
Bundling a car, home, or other insurance with the same provider can often lead to discounts.
For home and car insurance, improving security can lower premiums. Install alarms or tracking devices.
Paying annually instead of monthly can reduce the total cost.
Maintain a good history of no claims to avail of discounts over time.
For car insurance, lower mileage can often reduce premiums.
Some insurers use credit scores to determine premiums.
Ensure you’re not over-insured and adjust your coverage as circumstances change.
Always inquire about any additional discounts that may apply to you.
In conclusion, car insurance premiums might seem arbitrary, but they’re calculated based on various risk factors. Understanding these factors allows you to make informed decisions and possibly lower your insurance costs. Remember, the cheapest policy isn’t always the best, so consider the cover you’re getting for your money.
If you wish to use a third-party service to find insurance brokers, you could try BIBA.
For the most accurate and tailored insurance quote and to identify which insurer offers the best deal for your circumstances. It is advisable to use comparison tools and obtain several quotes.
To reduce policy costs when comparing car insurance in the UK, consider the following:
In closing, by applying these top 16 tips, you may find ways to improve your insurance costs.
Here is a summary of sources:
Data is calculated from the average of the top 5 cheapest premiums returned across price comparison websites (PCWs) and key direct providers. The Overall Market Top 5 monthly variation is averaged across all risk level variations for common risks in both months.
The proportion of quotes dropped to 17% for the top five cheapest telematics providers’ quotes from the three months to August.
Young Drivers: Only 41% of the rank one to five quotes for under-25s come from telematics after a 12% fall.
London, West Midlands, and South East: Experienced the highest increases in quoted premiums with 69.5%, 64.4%, and 64.2%, respectively. North West: The lowest rise was recorded but still substantial at 55%.
Conclusion
This report highlights a significant surge in car insurance premiums across all age groups and regions in the UK. There is a notable decrease in competitive quotes from telematics providers. The north-west region saw the smallest rise.
*51% of consumers could save £504.25 on their Car Insurance. The savings were calculated by comparing the cheapest price with the average of the five cheapest prices. These were quoted by insurance providers on Seopa Ltd’s insurance comparison website. This is based on representative cost savings from September 2023 data. The savings you could achieve depend on your circumstances and your chosen insurance supplier.
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