Motor insurance premiums have dropped each quarter so far in
2025, 1 according to the ABI's latest
tracker.2 Between July and September, the average
motor insurance premium was £551 – £13 lower than the previous
quarter.
When looking at the yearly picture, premiums in Q3 2025 were £56
lower than the same period in 2024. Adjusted for inflation, the
real-terms decrease is even more substantial, totalling
£79.3
Although premiums have eased from their peak, claims pressures
remain. ABI members paid out £3 billion in car insurance claims
during the third quarter of the year.4
Repair costs accounted for 64% of the total claims figure,
totalling £1.9 billion as the complexity and cost of fixing
modern vehicles remains high. Today's cars are packed with
advanced electronics, integrated sensors, and smart systems –
making even minor repairs more specialised, time-intensive and
costly.
With today's vehicles also often containing high-value components
and tech, they've become attractive targets for thieves. The cost
of theft-related claims totalled £142 million in Q3 – serving as
a stark reminder that tackling this challenge must remain a
priority for manufacturers, insurers, and government.
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.
“The industry continues to drive forward its 10-Point Roadmap
to help tackle the underlying cost of insurance. Government can
back the sector too by investing in training for the repair
sector and improving road safety. Crucially, any rise in
Insurance Premium Tax in the Autumn Budget risks reversing months
of hard-won progress.”
Anyone concerned about the cost of their motor insurance should
speak to their insurer to explore what support or options might
be available. Practical steps like increasing your excess,
improving vehicle security, or opting for a telematics policy can
help bring costs down. With a competitive market, shopping around
can also pay off – but it's essential to choose cover that fits
your needs, not just your budget.
Footnotes
- Motor premiums dropped £16 between April and June and fell
£42 at the start of the year, marking a consistent downward trend
across all three quarters.
- The ABI's Motor Insurance Premium Tracker is the most
comprehensive in the UK, analysing nearly 28 million policies
sold a year. It's also the only collection that is based on the
price customers pay for their cover rather than what they are
quoted (which typically delivers higher averages). More on this
in our blog.
- Inflation adjusted data shows what historic costs would have
been if they faced the same inflationary pressures we're
experiencing today, uncovering the real growth or decline.
- Insurance claims for privately owned cars, based on data
which the ABI started collecting in 2013.
We occasionally restate previously published figures when updated
data becomes available.
Insurance Premium Tax adds 12% to most general insurance policies
in the UK, including motor insurance.
