Market sees car insurance premiums fall overall, but under-25s are paying more

Quoted premiums drop for most UK drivers while young motorists face rising costs and shrinking choice.

Quoted Premiums Dip – But Not For All

Recent data from Consumer Intelligence reveals that quoted car insurance premiums have fallen by around 10.5% over the past year, offering relief to many UK drivers. Regions such as Wales reported the biggest drops (nearly 20%), with double-digit reductions in seven other areas.

However, the under-25 age group has experienced a very different trend: quoted premiums for younger drivers have risen by approximately 3% in the last three months, even as the broader market has stabilised or declined. For drivers in their late teens, increases of more than 30% have been reported, widening the gap between young motorists and older age groups.

A Decade of Shifts in Car Insurance Costs

Over the past ten years, car insurance premiums have fluctuated dramatically. After several years of steady increases fuelled by higher repair costs, supply chain shortages, and more complex vehicle technology, average premiums reached record highs in 2023.

While 2024 and 2025 brought modest relief for many drivers, today’s average premiums are still around 40–50% higher than they were five years ago. Inflation, expensive replacement parts, and rising labour costs have all contributed to elevated prices.

For many households, this makes the current fall in premiums welcome news — but the story is far from uniform across age groups or regions.

Why Young Drivers Are Paying More

Drivers aged between 17 and 24 continue to face the steepest costs. Insurers often regard this cohort as the highest-risk segment due to accident statistics, claims frequency, and lack of driving history. The recent retreat of several telematics providers has worsened the situation.

Telematics — sometimes called “black box” insurance — previously offered younger drivers a way to prove safe driving and secure lower premiums. As fewer insurers now offer competitive telematics products, many young motorists have been left with higher base quotes and less incentive to demonstrate their driving habits.

The result is that young driver insurance costs are diverging from the wider market, creating an affordability challenge for those under 25. In some cases, annual policies for 18–19-year-olds now exceed £2,000 per year, dwarfing the costs faced by older drivers.

Shay Ramani, spokesperson for Free Price Compare, said:

“While overall premiums are falling, young drivers haven’t caught a break. It’s vital they compare options to avoid overpaying.”

Older Drivers See Relief

By contrast, motorists aged 25–49 and those over 50 are seeing the benefits of lower quoted premiums. Average costs for these groups have dropped by around 10–11% year-on-year, giving some relief at a time when household budgets remain under strain from the wider cost-of-living crisis.

For older drivers with strong no-claims discounts, premiums have returned to levels not seen for several years. Some drivers in low-risk regions now report quoted premiums under £400 — a stark contrast to the thousands paid by younger motorists.

The Loyalty Penalty and Auto-Renew Trap

One factor still pushing up costs for many drivers is the so-called “loyalty penalty.” Despite rules introduced by the Financial Conduct Authority (FCA) to clamp down on unfair renewals, many insurers continue to quote higher prices for existing customers than for new ones.

This means drivers who simply auto-renew their policies without checking alternatives often miss out on potential savings. Industry research suggests that up to 40% of motorists allow their policy to renew automatically each year, handing insurers an opportunity to apply stealth price increases.

Consumers who take the time to compare car insurance premiums across multiple providers often find they can save hundreds of pounds annually — particularly if they time their shopping two to three weeks before renewal.

Regional Differences in Premiums

The recent data also highlights strong regional variation in quoted premiums:

Wales: Largest annual fall at 19.6%.
North East and Midlands: Double-digit reductions.
Scotland and London: Smaller decreases around 4–5%.

Regional risk profiles, urban density, theft statistics, and accident history all contribute to these differences. For younger drivers in metropolitan areas, premiums remain stubbornly high despite the broader market decline.

What Drivers Can Do

To navigate today’s uneven market, experts recommend:

Compare early: Premiums are usually cheaper two to three weeks before renewal.
Check telematics: Where available, black box policies may still deliver savings for young drivers.
Consider excess carefully: A higher voluntary excess lowers the premium but increases your out-of-pocket risk.
Limit mileage: Lower mileage can reduce quotes, but be realistic to avoid invalidating cover.
Evaluate add-ons: Breakdown cover, legal assistance, or courtesy car options can add up quickly.

Ramani noted:

“The difference between a quote and the real cost often comes from hidden risk factors. Young drivers should be especially careful about telematics, parking, and mileage.”

Outlook for 2026

Looking ahead, analysts expect car insurance premiums to remain volatile. The increasing complexity of vehicles — particularly electric and hybrid cars with advanced sensors — will keep repair costs high. A shortage of skilled technicians is also expected to put upward pressure on claims costs.

However, rising competition among insurers, combined with regulatory scrutiny of renewal practices, may continue to create opportunities for drivers to save. Experts believe the gap between younger and older drivers is unlikely to narrow significantly in the short term, meaning affordability for under-25s will remain a policy challenge.

Platforms like Free Price Compare will remain vital, helping drivers cut through complex options and secure fairer deals.

Ramani concluded:

“Insurance is one of the biggest annual expenses for UK households. Comparing quotes has never been more important — and it’s the only way to make sure you’re not paying more than you should.”