Why Has My Car Insurance Gone Up?

It's not just you – the cost of car insurance is going through the roof.

Just when you thought student life couldn't get any more expensive, BAM! Your car insurance renewal email lands. And it's so high, you're sure there must've been a mistake. A few frantic calculations later, and the cold, hard truth sinks in: it's not a typo.

According to insurance comparison site Confused.com, the most recent data shows the average cost of insurance is now £777. Younger drivers are always hit harder, and that means for many, the car insurance increase is even more staggering. The average premium for 18-year-olds is £2,434.

So, what's driving this insurance apocalypse? Is it the cost-of-living crisis? The war in Ukraine? The lingering effects of Covid-19? Let's find out.

Why has car insurance gone up?

Unfortunately there's no single reason why car insurance has got more expensive in the last few years, but a multitude of different things that have affected the price. So we're breaking down 7 reasons why the cost of your insurance has gone through the roof.

1. The lingering shadow of Covid

The pandemic may be fading from memory, but its impact on car insurance is far from over.

Lockdowns shuttered car factories worldwide, causing a shortage of new cars and a surge in demand for used vehicles. This, in turn, drove up the price of used cars and their spare parts, making repairs more expensive than ever before.

The result? Higher insurance premiums.

2. New cars, new price tags

As factories reopened, the cost of new cars also increased, driven by the ever-growing amount of tech crammed into modern vehicles. Think advanced safety features and sophisticated infotainment systems.

And if an average vehicle's value is higher than it was a couple of years ago, then it'll cost the insurer more to pay out if it's a write off.

3. Global chip shortage

Semiconductors are a critical part of daily life. Not only did they delay the PS5 you ordered, they're also in hard to get hold of critical car parts (like the car's brain, the ECU). Covid sure didn't help, but there are other causes. Like the China-US trade war, severe weather that forced three plants to close, fires at facilities, and the Russia-Ukraine war.

The latter meant that the price of neon gas used in chip production went up sixfold.

4. The Cost of Living Crisis

Inflation isn't just emptying your bank account at the supermarket, it's hitting garages hard too.

The Cost of Living Crisis means labour, energy, and spare parts have skyrocketed, making repairs more expensive than ever. These increased costs are inevitably passed on to you… in the form of higher premiums. For students who are already impacted by the cost of living, this can be a real cause for concern.

5. Roads are busier than ever

Remember the quiet roads of lockdown? They're a distant memory.

According to the Department for Transport, we drove a staggering 332.4 billion miles in the 12 months leading up to March 2024. That's a 2.1% increase on the previous year and almost 100 billion more miles than during the depths of lockdown.

With more traffic, comes more accidents, pushing up claims costs for insurers.

6. Learner drivers flood the roads

The pandemic also created a massive backlog of learner drivers, with driving tests suspended for months.

At one point, the backlog for the practical driving test was more than 500,000 according to a Freedom of Information request from motoring organisation The AA. As testing centres scramble to catch up, a flood of new drivers are hitting the roads. Statistically, drivers aged between 17 and 24 make up just 7% of drivers yet represent 21% of all drivers killed and seriously injured.

This influx of inexperienced drivers is another factor driving up premiums.

7. Young drivers: paying the price

Let's face it, being a young driver has never been cheap. But in 2024, it's downright painful.

Insurers view young drivers as high-risk due to their lack of experience, and the recent surge in accidents has only reinforced this perception. The result? Sky-high premiums for those under 25, even if they have a spotless driving record. Forget the student discount – when it comes to car insurance, 'student' is more often associated with a 'student surcharge.'

It's a harsh reality, but insurers often view students as higher-risk drivers compared to those in more established careers. But some insurers, like Ticker, offer cheaper car insurance for new or inexperienced drivers.

When will car insurance go down?

It's not all doom and gloom. Louise Thomas, a motor insurance expert at Confused.com, suggests that car insurance prices are beginning to stabilise. She offers some tips for saving money, such as choosing a higher voluntary excess and paying annually instead of monthly.

While there's no magic bullet to lower your premiums overnight, understanding the factors at play can help you make informed decisions and potentially find ways to save.

How can I get cheaper car insurance?

When it comes to keeping car insurance costs down, there are a few things you can do.

• Pick the right car. Avoid premium badges, and stick to something with a small engine (1.0-litre or less). We've got a list of the cheapest cars to insure for new drivers to help keep the cost to a minimum.

• Shop around. Use comparison websites to get the best quote, but remember that not all insurers work with comparison tools.

• Drive safely. Duh.

• Think about adding an older, more experienced driver to your insurance policy. Adding an experienced named driver could take up to £250 off your car insurance costs.

• Watch the excess. Having a higher excess can lower your premium. But if you don't have a grand, don't set a £1000 excess and hope for the best.

• Embrace the black box. Pay how you drive policies allow insurers to fit your car with a black box to get real world data about how you drive.

• Lock it up. Modern car security systems are great, but you might be able to chip a few quid off your premium by adding a Halfords steering wheel lock and not leaving it on a dodgy street.

• No modifications. We get it. You want to go faster and fit a bigger exhaust – but you'll regret it. Not only when you try to get insurance but also in a few years time when you question your life choices.

If you're planning to shop around for car insurance, make sure you check out Student Beans finance discounts to help cut the costs.