Why has car insurance gone up?
A higher car insurance renewal can have two very different causes: the whole market moving, or something about you, your car or your claims history. The renewal letter rarely says which, and it is easy to assume the worst.
So here is what the published figures show, and what the FCA’s rules say about a car insurance renewal price. This is information, not advice. It does not tell you which insurer or policy to pick, and your own quote will vary with you, your car, your address and your claims history. Paying whatever the renewal letter says is the Do-Nothing Default, and a few minutes of checking is a better habit.
Key takeaways
- The ABI says the average motor premium paid was £566 in April to June 2026, up 1% on the previous quarter.
- The ABI says repair costs are rising, partly because modern cars carry more cameras and sensors.
- FCA rules say a firm must not set a renewal price above the equivalent new business price.
- Those rules do not stop a car insurance renewal rising for reasons that apply to you.
What do the ABI figures say about car insurance renewal prices?
The Association of British Insurers (ABI) tracks what drivers actually pay, across more than 28 million policies a year. For April to June 2026, it says the average premium paid was £566, up £6 (1%) on the previous quarter. Adjusted for inflation, it says that is £14 lower than the same quarter in 2025.
So across the market, the ABI describes premiums as relatively stable. If your own car insurance renewal is up by much more than that, the cause may be personal to you, or may sit in how your insurer priced it.
The ABI also says insurers paid out a record £3.2 billion in claims in the quarter, and that the average claim payout rose 4% to £4,900. It links that to rising repair costs, and says modern vehicles with cameras, sensors and driver assistance systems can make repairs and replacements more costly. You can read the ABI’s full release on its website.
Can your car insurance renewal price be higher than a new customer’s?
For home and motor insurance, the FCA says no. Its Handbook rule says a firm must not set a renewal price that is higher than the equivalent new business price. The rule applies at the point the renewal notice is prepared.
The rules in this part of the Handbook carry dates from 1 January 2022. The FCA says their purpose is to give consumers a realistic picture of the long term cost of a product and to make firms compete on that basis.
There are details worth knowing. For a combined home and motor package, the FCA says the home element, the motor element and the bundled price must each be no higher than the equivalent new business price. And when working out the equivalent new business price, a firm must assume the existing customer approached it through the same channel they used when they first bought.
You can read the rules in the FCA Handbook.
Why might your car insurance renewal rise when others do not?
Because the FCA’s car insurance renewal rule is about how a renewal compares with a new customer’s price, not about how risk is priced. The Handbook says the rules are not intended to affect how risk is priced for home and motor insurance.
In plain terms, a car insurance renewal can still rise if the risk the insurer sees has changed, or if the cost of claims has gone up, or if the price for a comparable new customer has gone up too. A renewal that matches a new customer’s price is allowed to be higher than last year’s.
Quotes vary by person, car and address. Things like the car you drive, where it is kept, who drives it and your claims history can all play a part. That is why a friend’s renewal tells you very little about yours.
What should you do when your car insurance renewal arrives?
Ask your insurer how it calculated the car insurance renewal price, and what has changed since last year. Then get quotes for the same car, the same drivers and the same level of cover from other providers, so you compare like with like.
Check the excess and what the policy actually covers, not just the headline price. A cheaper policy with a bigger excess or thinner cover is not the same product. If you want to see how other insurance decisions work, our guide to phone insurance is a short read, and our electric car insurance guide covers five questions worth asking any insurer.
Give yourself a few weeks before your car insurance renewal date. Rushing at the last minute can lead to accepting whatever is on the letter.
Frequently asked questions about car insurance renewal
- Why has my car insurance gone up this year?
- It could be market wide, personal to you, or both. The ABI says the average premium paid was £566 in April to June 2026, up 1% on the previous quarter, so a much bigger rise may be about your own circumstances.
- Can my renewal price be higher than a new customer’s price?
- The FCA Handbook says a firm must not set a renewal price higher than the equivalent new business price for home and motor insurance.
- Does the FCA rule stop my car insurance renewal going up?
- No. The Handbook says the rules are not intended to affect how risk is priced, so your premium can still rise for reasons that apply to you.
- What does the ABI average premium include?
- The ABI says its tracker is based on what customers paid rather than what they were quoted, for privately owned cars, across more than 28 million policies a year.
- Is the ABI average the price I will pay?
- No. It is a market average. Your own price depends on you, your car, your address and your claims history.
