Car Insurance Set to Rise: What Finance Buyers Should Do
💡 Key Takeaway
Insurers warn premiums need to rise as claims costs climb. What it means if your car is on finance, and how to keep your cover costs down.
After two years of premiums drifting down, the car insurance market is starting to turn. 📈
Insurers are warning that prices need to go up to keep pace with the rising cost of claims. If your renewal is coming up, it's worth knowing what's happening and what you can do about it.
That goes double if your car is on finance, because insurance isn't optional on a financed car.
What the numbers say right now
For the moment, the average quote is still lower than a year ago.
According to Confused.com's latest price index, published in September 2026, the average comprehensive premium was £713 in the third quarter. That's £22 (3%) cheaper than 12 months earlier, and slightly down from £719 in the second quarter.
But Confused.com also warned that drivers who simply accept their renewal quote could end up paying more than £800.
Why insurers say prices must rise
The pressure is coming from the cost of paying out on claims.
Sabre Insurance Group's chief executive, Geoff Carter, said in its half-year results in August that the motor market needs "some pretty chunky price increases". Autocar reported on 9 November that he expects claims costs to rise by up to 7% this year.
Consultancy EY has forecast that policyholders could face premium increases of around 16% over the next two years. Repair costs, parts and labour, and the growing complexity of modern cars, are all part of the story.
So far, competition between insurers has held prices back. The warning is that this won't last forever.
Why it matters more on finance
When you take out car finance, your agreement will normally require you to keep the car fully insured for the whole term. The lender owns the car (or has an interest in it) until you've paid in full.
That means:
- Letting cover lapse isn't an option, even for a month
- Insurance is part of your real monthly cost, alongside the finance payment, fuel and tax
- If the car is written off, the insurer pays its market value, which might be less than you owe. That's where GAP insurance comes in
💡 When we work out affordability with customers, we always encourage them to price up insurance before choosing a car, not after.
Six ways to keep your premium down
You can't control the market, but you can control quite a lot of your own quote. ✅
- Never auto-renew without comparing. Shop around three to four weeks before renewal, when quotes are often cheaper than last-minute
- Check your insurance group before you choose a car. Two similar cars can be miles apart on price
- Pay annually if you can. Monthly insurance often carries interest
- Be accurate about mileage and parking. Overstating mileage costs money; understating it can invalidate a claim
- Look at your excess. A higher voluntary excess can lower the price, but only if you could afford to pay it
- Consider telematics if you're a younger or newer driver
What about EVs?
Electric cars have often cost more to insure, partly because of repair costs and specialist parts.
That gap is worth checking carefully if you're moving into an EV on finance. With BEVs now taking around a third of new car sales in recent months, more insurers are pricing them competitively, so comparison really pays.
Planning your next car?
If you're choosing a new car in Reading, Berkshire or anywhere in the UK, it's worth looking at the total monthly cost, not just the finance payment.
At We Finance Your Asset, we'll help you find a finance deal that fits your budget, so there's room for insurance and everything else. Get in touch for a no-obligation quote. 👉