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.
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.
Chris Bose
Director of General Insurance Policy at the ABI
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.