UK insurance premiums are rising - WHY

1st November 2025

UK insurance premiums especially for car insurance—have risen sharply in 2025 due to inflation, higher repair costs, and increased claims. Home insurance has remained relatively stable but is under pressure from weather-related damage.

Car Insurance - Sharp Increases in 2025
Premium Surge: Average car insurance premiums have jumped by nearly 18% compared to 2024, marking the steepest rise in over a decade.

Current Average - As of July 2025, the average annual premium is around £735, though this varies by region and driver profile.

Key Drivers of the Increase

Rising Repair Costs: Inflation in auto parts and labour has pushed up the cost of claims.

Vehicle Theft: A spike in car thefts has led insurers to raise premiums across the board.

Claims Volume: More accidents and claims have been reported, especially among younger and urban drivers.

Economic Factors: General inflation and higher interest rates have increased operating costs for insurers.

Home Insurance - Stable but Under Pressure
Flat Premiums: The average cost of combined buildings and contents cover dropped by just £2 in Q2 2025.

Weather-Driven Claims: Storms and bad weather caused £322 million in damage claims—a 7% increase from earlier in the year.

Outlook: While premiums haven't spiked yet, continued climate-related damage could lead to future hikes.

What You Can Do
Shop Around: Use comparison sites to find better deals and avoid auto-renewal traps.

Increase Excess: Opting for a higher voluntary excess can reduce your premium.

Bundle Policies: Combining car and home insurance with one provider may offer discounts.

Improve Security: Installing dash cams, trackers, or home alarms can lower risk and premiums.