The cost of car insurance has fallen by a quarter to a two-year low, according to new Premium Drivers research from Compare the Market.
The average premium declined by 22% year-on-year, to £600 in August 2025 compared to £762 in August 2024 – marking a decrease in price of £162. This is the lowest that car insurance premiums have been since October 2022, when premiums were £589. The average premium has also fallen across the last four months by £53 from May 2025.
The continued drop in average premiums may in part be due to lower levels of inflation putting pressure on insurers, as well as a fall in the level of motor claims. As a result of the decline, the cost of car insurance is, on average, £351 cheaper than in November 2023 when the average premium peaked at £951.
Across the UK, drivers in Yorkshire and The Humber have seen the steepest fall in average car insurance premiums – down by £361 year-on-year. Despite this, motorists in the region typically pay the most for car insurance currently at £1,221.
Drivers in the South West have only seen the average cost of car insurance fall by £91 from the previous year, but the current average premium was the cheapest in the country at only £463.
Drivers looking to make the most of continued falling premiums should consider shopping around for a cheaper deal when their policy comes up for renewal. Motorists could save up to £473 on their car insurance through Compare the Market.
Amy Rootham, Insurance Expert at Compare the Market, said, “Many motorists will be delighted that the cost of car insurance is continuing to fall. Drivers should look to take advantage of this by shopping around for a cheaper deal when their policy ends. Choosing to auto-renew a policy may lead to motorists missing out on substantial savings.”
