Why Has My Car Insurance Gone Up in 2026?

Why has my car insurance gone up when you haven’t claimed, moved or changed your car? In most cases the answer has little to do with you personally and a lot to do with the rising cost of motor claims across the whole UK market. Insurers reprice every policy at renewal based on current claims costs, and those costs have been climbing again even while the market average has fallen from its 2023 peak.

The wider picture in mid-2026 is mixed. Average premiums are below where they were a year ago, but the fall has slowed and some drivers, regions and age groups are now seeing increases again.

• Your renewal is repriced each year on the insurer’s latest view of risk and claims costs, not just your own record.
• The FCA found in July 2025 that premium rises are driven mainly by external claims costs, not insurer profit, with the average claim cost up 37% from 2019 to 2023.
• Vehicle repair costs are the biggest single pressure: of the £2.9 billion insurers paid out in Q1 2026, around £1.9 billion went on repairs (ABI, 30/04/2026).
• Shopping around at renewal is the most reliable way to cut what you pay, as loyalty rarely lowers a premium.

What’s really pushing premiums up right now

The main reason car insurance premiums rise is the rising cost of settling claims, which insurers spread across all policyholders. The Financial Conduct Authority (FCA) confirmed this in its Motor Insurance Claims Analysis published in July 2025, finding that higher prices for cars, parts, labour and energy, plus more complex vehicles and stretched supply chains, were the primary drivers of premium increases rather than insurers seeking higher profit margins.

The numbers behind this are stark. The FCA found the average claim cost rose 37%, from £2,410 in 2019 to £3,293 in 2023, pushing the claims cost per policy from £309 to £391 over the same period. Over 44 million policies were sold in the UK in 2024 with total premiums above £20 billion, so even modest cost rises feed through to a large number of drivers.

Repair costs remain the single largest pressure in 2026. The Association of British Insurers (ABI) reported that of the £2.9 billion paid out in claims in Q1 2026, around £1.9 billion was for vehicle repairs, up 3% on the previous quarter, with the average accidental damage claim reaching £3,699. Modern cars with sensors, cameras and complex electronics simply cost more to fix.

Is car insurance actually rising or falling in 2026?

Car insurance is broadly cheaper than a year ago, but the rate of decline has slowed and is reversing for some drivers. According to the ABI Motor Insurance Premium Tracker, the average motor premium in Q1 2026 was around £560, marginally up by £1 (0.2%) on Q4 2025 but still around £20 lower than Q1 2025. The ABI tracker is based on prices customers actually pay across over 28 million policies a year, not prices quoted.

For context, the market average peaked in late 2023 before insurers began competing harder and prices started falling through 2024 and 2025. What’s notable now is the underlying costs are moving in the wrong direction again, with repair claims rising quarter on quarter. That’s why a clean-record driver can still see a higher renewal in 2026.

Figures are indicative and may change. Source: ABI Motor Insurance Premium Tracker.

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Why has it gone up with a clean record and no claims?

Your premium can rise with a spotless record because insurers reprice on the whole market’s claims experience, not only your own. Every year your insurer recalculates the cost of covering people like you in your area, on your car, and if those underlying costs go up, your renewal can too, even with a full no-claims bonus.

A no-claims bonus is a discount insurers give for each consecutive year you don’t make a claim, but it only reduces a premium that is itself being recalculated. If the base risk price rises faster than your discount grows, your final price still goes up. Several background factors feed in independent of your driving:

• Higher repair, parts and labour costs across the market, as found by the FCA and ABI.
• Rising costs linked to uninsured drivers. The FCA noted claims tied to uninsured drivers rose from £329 million in 2019 to £452 million in 2023, with a levy charged to all insurers.
• Vehicle theft and the cost of replacement vehicles while repairs are carried out.
• Insurance Premium Tax (IPT), a government tax applied to your premium.
• Your age moving you into or out of a higher-risk band, even by a year.

One overlooked factor is changes to your policy. Removing a named driver can sometimes raise the price if that person was lowering the overall risk profile, and adding modifications can also increase it. It’s worth checking how modifications affect your car insurance premium before making changes.

How does Insurance Premium Tax affect what you pay?

Insurance Premium Tax (IPT) is a government tax added to most general insurance policies, charged on car insurance at the standard rate of 12% as of 2026. The government sets the rate, and insurers pass it on to customers, so any future increase would raise premiums directly without anything changing about your driving or your car.

On a £600 annual car insurance premium, IPT at 12% adds in the region of £64 to the cost. Because it applies to every policy, IPT is part of the reason even the cheapest quotes carry a built-in floor. The rate has risen over the years, so it’s a slow-burn contributor to higher premiums across the market.

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Does your postcode and age change the price?

Yes, your postcode and age are two of the strongest rating factors insurers use, and both can push a premium up at renewal. Insurers price by area because claims frequency, theft rates, traffic density and repair costs vary widely across the UK. Inner London remains the most expensive region for cover, while the South West tends to be the cheapest.

Regional movement matters too. Most British regions saw premiums fall over the year to early 2026, but Northern Ireland has been the consistent outlier, recording an annual rise where it was the only region to see prices increase. Drivers in certain towns and postcodes have also seen quarter-on-quarter increases even where the national trend is downward, which is why two near-identical drivers a few miles apart can pay very different prices.

Age is equally influential. The ABI notes drivers aged 66 to 70 are among the best off, paying around a quarter of what 17 to 20 year-olds pay. Young drivers saw the biggest annual falls in 2026, with 17 year-olds benefiting from a 25% drop, but their premiums remain far higher in absolute terms and well above where they sat five years ago. Crossing an age threshold, even by a single year, can move you into a different risk band.

Moving house, new builds and policy changes

Moving home can raise your car insurance because your new postcode carries a different risk rating, sometimes higher even if the area feels safer. Insurers assess local claims history, theft rates and how and where your car is parked overnight, so a move to a new-build estate or a busier area can increase your premium mid-policy or at renewal.

Keeping your details accurate is a legal and practical requirement. Always update your address, annual mileage and where the car is kept, because an out-of-date policy could leave a claim disputed. If you’ve reduced your driving, it’s worth checking whether pay-by-mile insurance suits your situation, as lower mileage can reduce risk-based pricing.

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Why non-fault claims can still raise your premium

A non-fault claim can still increase your premium because it raises your statistical likelihood of future claims in the insurer’s data, regardless of who was to blame. Insurers treat any claim on your record as a risk signal, and the cost of recovering money from the at-fault party’s insurer can take time and isn’t always fully recovered.

This frustrates many drivers, but it reflects how risk modelling works rather than a penalty for your behaviour. The effect is usually smaller than a fault claim and may fade over a few years. It’s still worth declaring every incident honestly, as non-disclosure can void a policy and cause a future claim to be refused.

How to lower your renewal and whether to switch

The most reliable way to lower a car insurance renewal is to compare the whole market rather than auto-renewing, since loyalty rarely earns a lower price. Insurers reprice every year, and the cheapest provider for you can change annually, so the renewal quote on your doormat is rarely the best available.

Practical steps that can reduce your premium include:

• Compare quotes before you renew, ideally around three to four weeks ahead, as last-minute quotes tend to cost more.
• Pay annually rather than monthly where you can, to avoid interest on instalments.
• Increase your voluntary excess if you can afford the higher payment after a claim.
• Add a responsible, experienced named driver where appropriate.
• Check your job title and annual mileage are accurate, as small wording differences affect price.
• Consider a telematics or black box policy if you’re a lower-risk or younger driver.

Switching is usually worth it when your renewal rises or even stays flat, as that flat price may still be beatable elsewhere. Despite the savings on offer, car insurance switching has fallen to record-low levels, which means many drivers are paying more than they need to. Free Price Compare compares cover from a panel of more than 130 insurers, and according to our own data around 8 in 10 car insurance purchases are made on a mobile device.

It’s also worth checking you’re on the right cover type, as comprehensive is often priced similarly to or cheaper than third-party cover. Our guide to the different car insurance types explains which suits your circumstances.

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• Car Insurance Switching Hits Lowest Level on Record
• How to Check If a Car Is Insured – FreePriceCompare
• Car Insurance and Modifications – FreePriceCompare
• Is Pay by Mile Insurance an Option? – FreePriceCompare
• Understanding Car Insurance Types: Choose the Right Coverage

Information correct as of 19 June 2026. Prices, tariffs, policy details and providers change frequently, so please check the latest details before making a decision. This article is for general information only and does not constitute financial advice.