Average Car Insurance Cost UK 2026: £566 a Year (ABI)

Average car insurance cost in 2026

The Association of British Insurers Motor Insurance Premium Tracker put the average premium paid at £566 in Q2 2026. This was £6, or 1%, higher than the Q1 2026 average of £560. Adjusted for inflation, the Q2 2026 average was £14 lower than in the same quarter of 2025.

The Q1 2026 average of £560 was a £1 (0.2%) increase on Q4 2025, which puts Q4 2025 at £559. The Q1 2026 average was £20 lower than Q1 2025, which puts Q1 2025 at £580, and £38 lower once adjusted for inflation.

The ABI published the Q2 2026 figures on 30 July 2026.

Price paid compared with quoted prices

The ABI tracker is based on the price customers actually paid for cover, not on quoted prices. Some other published averages are built from quotes, including quotes that were never bought, so figures from different indices are not directly comparable.

The ABI figure is an average across all drivers who bought cover in the quarter, so an individual premium can be far above or below it.

What insurers paid out in claims

Insurers paid a record £3.2 billion in motor claims in Q2 2026, 5% more than in Q1 2026 and 7% more than in Q2 2025. The average motor claim in Q2 2026 was £4,900, up 4% on Q1 2026. The ABI linked the rise in part to increasing vehicle repair costs.

Windscreen claims rose fastest in Q2 2026, with the average repair bill up 7% to £283. In Q1 2026 insurers paid £2.9 billion in motor claims, of which £1.9 billion was for vehicle repairs, up 3% on Q4 2025. The average accidental damage claim in Q1 2026 was £3,699, up 8% on the previous quarter.

Source: Association of British Insurers, Q1 and Q2 2026 motor releases

Insurance Premium Tax and the law on cover

Insurance Premium Tax is charged on general insurance premiums at a standard rate of 12%. A higher rate of 20% applies to travel insurance, certain insurance sold with mechanical or electrical appliances and certain insurance sold with some motor vehicles. The tax is included in the premium quoted to the customer rather than added at the end.

Section 143 of the Road Traffic Act 1988 makes it an offence to use a motor vehicle on a road or other public place without insurance against third-party risks. Third-party only cover is the legal minimum. Third party, fire and theft, and comprehensive policies add cover for the policyholder's own vehicle.

Renewal prices and the FCA pricing rules

Under FCA rules in ICOBS 6B.2, in force since 1 January 2022, an insurer must not offer a renewing customer a price higher than the equivalent new business price through the same sales channel. The rule applies to home and motor insurance sold to consumers.

The rule compares the renewal price with what the same insurer would charge an equivalent new customer, not with prices from other insurers. The ABI average of £566 in Q2 2026 is the price paid across new and renewing customers.

What changes an individual premium

Insurers set premiums from rating factors that include the driver's age and driving experience, the postcode where the car is kept, the car's insurance group, annual mileage, claims history and no claims discount. The level of voluntary excess chosen by the policyholder also changes the premium.

The ABI tracker average covers all of these combinations, so it shows the market level rather than the price for any one driver. Rising claims costs, such as the £4,900 average claim in Q2 2026, feed into premiums over time.

Frequently asked questions

What is the average cost of car insurance in the UK?

The average price paid for car insurance in the UK was £566 in Q2 2026, according to the Association of British Insurers Motor Insurance Premium Tracker. This was up £6, or 1%, on Q1 2026.

Is car insurance getting cheaper in 2026?

Car insurance prices rose slightly between Q1 and Q2 2026, with the average up £6 to £566. However, the Q2 2026 average was £14 lower than a year earlier after adjusting for inflation, and Q1 2026 was £20 lower than Q1 2025.

How much tax is included in a car insurance premium?

Insurance Premium Tax at the standard rate of 12% is included in general insurance premiums. A higher rate of 20% applies to certain insurance sold with some motor vehicles.

Can an insurer charge more at renewal than for a new customer?

No. Since 1 January 2022, FCA rules in ICOBS 6B.2 stop an insurer offering a renewing customer a higher price than the equivalent new business price through the same channel.

What is the minimum car insurance required by law?

Third-party cover is the minimum required by law. Section 143 of the Road Traffic Act 1988 makes it an offence to use a motor vehicle on a road or other public place without insurance against third-party risks.