Motorists get £221 boost – but one type of car ‘costs £217 more’

Drivers have been given a rare piece of good news as a new research has found that a key cost has dropped for the first time in two years. The average cost of car insurance has declined by £221 (23%) year-on-year, according to new Premium Drivers research from Compare the Market.

The average premium fell to £729 in December 2024, compared to £950 in December 2023. It is the cheapest monthly average premium since May 2023 when the average was £718, the researchers said. The drop in average premiums may in part be due to a stabilisation in the cost of claims for insurers as inflation has slowed in recent months, the experts said. However, the average premium is still £105 (17%) more expensive than December 2022 (£624).

Older drivers have seen a smaller fall in the cost of car insurance compared to younger age groups. The average premium for motorists aged 80 or above has declined by £61. Young motorists, aged under 25, have seen the largest decline in average premiums as the cost of car insurance for these drivers has dropped by £425 year-on-year to £1,577.

Compare the Market: Average car insurance premiums by age

Across the UK, London drivers see the steepest fall in average car insurance premiums – down by £370 year-on-year. However, motorists in the capital typically pay the most for car insurance at £1,202. Drivers in Wales have only seen the average cost of car insurance fall by £62 from the previous year, but the average premium in this country is £620.

Average car insurance premiums by area

The research also found that each car’s transmission can make a significant difference to the cost of its insurance. The average premium for an automatic car is £860 in December 2024. This is £217 more than the average for a manual car in the same month (£643).

Automatic cars are usually more expensive to insure as they tend to be more expensive to buy than manuals, and automatic gearboxes are more complex than manual ones, so typically cost more to replace. The significant decline in car insurance premiums year-on-year means drivers who shop around for car insurance rather than automatically renewing could find a great deal, the researchers said.

Even if a driver’s renewal premium is less than last year, one of the best ways to save money on your car insurance is to compare online first. Motorists could save up to £510 on their car insurance through Compare the Market.

Julie Daniels, motor insurance expert at Compare the Market, said: “Many motorists will be delighted that the cost of car insurance has declined significantly compared to last year. As household budgets experience wider pressures, cheaper car insurance will be welcome news following the steep insurance price increases seen in previous years.

“One specific tip I’d give any motorist looking to save money on their car insurance is that it’s still important to compare car insurance online before renewing with your existing provider. While some drivers may see their renewal price drop, by taking that action to shop around, you’ll see how much you could save by switching.”

About the data

All insurance premium data is sourced from Compare the Market. 51% of Compare the Market customers were quoted less than the cost stated for December 2023 and December 2024 respectively. Based on Online independent research by Consumer Intelligence during December 2024, 51% of customers could achieve the £510 saving on their car insurance through Compare the Market.