The average car insurance premium has dropped by £56 over the past year, according to figures from the Association of British Insurers (ABI). The data reveals that between July and September, the average car insurance premium was £551 – a decrease of £13 from the previous quarter and £56 less than the same period in 2024.
The ABI's car insurance premium tracker, which analyses nearly 28 million policies sold annually, is based on prices paid by drivers rather than quotes. So far in 2025, car insurance premiums have seen a decline each quarter, both quarterly and annually.
Despite the reduction in premiums, claims pressures persist, the ABI warned, with its members shelling out £3 billion in car insurance claims during the third quarter of the year. Repair costs made up approximately two-thirds (64%) of the claim figure, as the complexity and expense of repairing modern vehicles remains high, it noted.
Advanced electronics, integrated sensors and smart systems are making even minor car repairs more specialised, time-consuming and expensive, the ABI highlighted.
High-value components and technology are also making cars an attractive target for thieves. Theft-related claims amounted to £142 million in the third quarter of this year.
Chris Bose, director of general insurance policy at the ABI, said: "Three straight quarters of falling motor premiums will be welcome news for drivers and the industry alike. However, these continue to be tough times for many families facing higher cost-of-living bills, and underlying pressures on claims haven't gone away."
Anyone concerned about the cost of their motor insurance should speak to their insurer to explore what support or options might be available, the ABI said.
Options such as increasing the insurance excess, improving vehicle security, or opting for a telematics policy may help to bring costs down, as well as shopping around for a suitable and cost-effective deal.