Cheaper Car Insurance & How To Get It

Car Insurance

Most of the time we talk about rising costs and the problems we all face, but there is some good and unusual news. The cost of car insurance seems to be falling. Here is the Money Doctor’s Guide to car insurance and some ideas on how to get the best deal. 

Q: What has been happening to car insurance process recently?

 The average cost of cover in Q4 2025 was £559, 10.2% (£63) lower than the average cost in the same quarter during 2024. 

What’s surprising about that is that according to the industry, insurance claims are actually rising.

The Association of British Insurer’s (ABI) latest figures reveal that motor insurers paid out £2.9 billion in the final quarter of 2025, as high repair costs continue to drive up claims, taking total payouts for the year to £11.9 billion.  

The cost of motor claims continues to be pushed higher because cars are getting more complex with additions such as sensors and cameras, all of which are costly to repair or replace when damaged or stolen. The rising cost of parts also means repairs are becoming more expensive, – which adds further pressure to overall repair costs. 

So, the insurance story is becoming more complex., It is no longer “Prices soaring.” It is now “Premiums are falling while underlying costs remain huge.”

That’s a genuinely interesting shift. So Prices falling, but pressure building underneath.

Q: Why did premiums start falling?

 It is odd to see premiums fall while the cost of repairs are rising. One under-the-radar but important reason might be a new way of claiming for whiplash in particular, which may have led to less insurance payouts for relatively minor (but still significant) injuries.

Q: Why did whiplash claims fall?

 The whiplash reforms were a big change to how minor road-traffic injury claims are handled in England and Wales, designed to reduce what the government and insurers said were too many low-value compensation claims — and, in theory, to help bring car insurance prices down.

The reforms came into force a few years ago but may now be showing a change in behaviour.

The reforms include:

Fixed compensation tariffs

Compensation for minor whiplash injuries lasting up to about two years now follows a fixed government tariff — not negotiated case-by-case.

So, payouts became more predictable and generally lower.

Small Claims Court

The limit for road-traffic injury claims in the small-claims court was raised from £1,000 to £5,000 for injury claims.

That matters because:

• In small-claims cases, legal costs usually aren’t recoverable.

• Many claimants therefore represent themselves instead of using solicitors.

Q: It’s important to compare quotes but are all comparison sites the same?

 Comparison sites can negotiate their own prices with insurers – so the same insurance might cost different amounts on different sites. Also some insurance may appear on one site and not on another.  So, it's best to use at least two comparisons, to ensure you are getting the best quote.

Q: When is the best time to get an insurance quote?

 MSE’s analysis of insurance quote timing showed that if you got a quote 26 days before renewal, you would save over £1,000 compared to getting a quote on renewal day. Put a reminder in your diary 26 days before the renewal is due to remind yourself to get a quote.

Q: I’ve heard that a 'telematics' device can lower insurance costs – what’s that about?

Telematics is a policy that prices your premiums depending on how you drive. They are often called Black Box trackers and they monitor how you drive.  If it records generally careful driving it can reduce the cost of premiums by £100s of pounds.

Often these speciality insurance features are especially useful for younger person insurance – which can be high as insurers are concerned about the quality of the driving of new drivers.

Q: Other ways of cutting insurance cost?

 You can generally lower the cost of your insurance, by increasing the excess on the policy.

However, if you did need to claim, you'd need to pay the total amount of both the compulsory and voluntary excesses before the insurer would start to pick up costs. So if you had a £250 compulsory excess and a £250 voluntary excess, then you'd need to pay the first £500 of any claim. If the claim total exceeded this, the insurer would need to pay for the rest.

Q: What’s a no claims bonus and how do I use it? 

A No Claims Bonus (NCB) — sometimes called a No Claims Discount — is one of the biggest money-saving features in car insurance. It rewards drivers for not making claims on their policy. The longer you go without claiming, the larger your discount can become.

Over time, an NCB can reduce your premium significantly — sometimes by up to 60–70% after several claim-free years. This can mean saving hundreds of pounds annually.

Many insurers offer No Claims Bonus Protection as an add-on. This means you may be able to make a limited number of claims without losing your accumulated discount. This gives extra security and peace of mind while maintaining your long-term savings.

Q: There is also a new and simpler way of making claims – how does that work?

 A new government-backed online system — the Official Injury Claim portal — was created so people could submit low-value claims directly without lawyers.

The idea was to:

• simplify the process

• reduce legal costs

• cut down on fraudulent or exaggerated claims

This may have helped cut costs for insurers and helping ease pressure on premiums.

According to insurers and HM Treasury’s statutory report, reforms to whiplash claims have cut the number and cost of minor injury claims — helping shave around £15-£31 off average premiums. Before the reforms, whiplash alone was costing UK insurance companies over £2 billion a year.

Q: What is the Official Claims Portal?

The Official Claims Portal (OIC) service can be used by individuals to make and settle their own personal injury claim, where that claim is related to a road traffic accident and is valued at £5,000 or less.

Visit the OIC website to get started (www.officialinjuryclaim.org.uk). The service is free, independent and does not profit from your claim.

If you think your injury claim is worth more than £5,000 you should seek independent legal advice before continuing. If you believe your claim is worth up to £5,000 you should read the guide on the main site which will walk you through the 5 main steps to making a personal injury claim using OIC. You can choose to make a claim yourself or with the help of a lawyer or other claims professional.

Be careful you are using the official site and nothing which sounds similar but is not the official government site. The official site does NOT charge anything.

Q: How much can I claim

Let’s take whiplash only injuries as an example - if you have only suffered a whiplash injury (or injuries) to your neck, back or shoulder, this will be valued using a whiplash-only tariff. This is a pre-set amount of damages that can be awarded, depending on the type and length of the injury suffered.

The amount of compensation varies from £240 to £4,215

Details of the amounts payable are here: https://www.legislation.gov.uk/uksi/2021/642/regulation/2/made

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