Drivers in London are being urged to cash in on car insurance savings, ahead of an expected rise in other motoring costs later this year.
The average cost of car insurance in Inner London has fallen by £186 (-14%) in the past 12 months, to now sit at £1,119.
Meanwhile, in Outer London, prices are now £917, following a £164 (-15%) decrease year-on-year. That’s according to the latest car insurance price index by Confused.com, powered by WTW. Based on more than 6 million quotes over 3 months, it’s the most comprehensive new policy car insurance price index in the UK.
In Inner London, some drivers will be seeing greater savings than the regional average when shopping around.
That’s as prices in London City, North, South East and South West London all fell by 15% in the past 12 months. This equates to savings of up to £196. Meanwhile, West Central London is the most expensive area in London for car insurance, with average premiums now £1,444. That’s despite falling by £193 (-12%) year-on-year.
In Outer London, drivers in both Romford and Watford are seeing the biggest savings, of -17%, on average. This equates to £200 and £158 less than 12 months ago, respectively.
It’s a similar picture across the rest of the UK, where the average premium fell by £111 (-13%) to £726. This is the lowest prices have been in more than 2 years.
While car insurance prices have been dropping consistently for more than a year, prices are at the lowest point reported since March 2023. With many other motoring costs expected to rise this year, drivers are being urged to take advantage of lower insurance costs by shopping around when renewing their policies. And data shows that shopping around 28 days before renewal could save as much as 53%, on average.
This comes as many drivers face an increase in Vehicle Excise Duty (VED) from April, otherwise known as road tax, which is set to rise in line with the Retail Price Index (RPI) inflation. Similarly, EV drivers are no longer exempt from road taxes and will be paying the standard annual rate of £195.
Another price increase drivers could expect in 2026 is the amount paid in fuel duty. From September, the freeze on fuel duty, which is currently capped at 5p, is set to be reversed. This means fuel duty will rise each year with inflation, making it more expensive to fill up at the pump.
For those who frequently travel through the London congestion zone, prices will increase to £18 per day. And for this, EV drivers will no longer be exempt and could be paying 75% – 100% of the charge per day.
These increases could result in hundreds of pounds worth of extra charges for many drivers next year – while car insurance proves to be bucking the trend and saving drivers money when they shop around.
However, further research shows that while car insurance prices are dropping, many aren’t seeing these savings reflected in their renewal price. A survey of 2,000 UK drivers found that more than 2 in 5 (42%) saw their renewal price increase by £72, on average, compared to the previous year. Of these drivers, almost half (47%) shopped around and switched insurers, saving £87, on average.
In comparison, only 29% had a cheaper renewal of £59, on average. However, more than a quarter (26%) decided to shop around, saving a further £63, on average.
It’s clear that shopping around is the key to saving money on car insurance. Although, worryingly, many drivers could be missing out on even better savings. According to the research, 71% of UK drivers shop around for car insurance up to 25 days before their policy is due for renewal. But new data finds that running a quote 28 days before your renewal is due could be the key to getting the best price. Confused.com car insurance data shows that buying car insurance around 28 days before renewal could be 53% cheaper than buying on the renewal day.
Rhydian Jones, motoring expert at Confused.com car insurance, said, “Car insurance is a considerable expense for many of us. But prices are cheaper now than they have been in recent years. And this is welcome news, given that many motoring costs are set to rise in 2026 – adding hundreds of pounds to our motoring bills.
“After insurance, fuel is another major cost for drivers, and if the fuel duty freeze ends this year, drivers will feel it in their pockets. Especially those who spend a lot of time on the road. And VED charges could increase for many too. While some may only see minimal changes, EV drivers in particular will be paying close to £200 more per year than they have previously.
“With this in mind, it’s more important than ever for drivers to save money where they can. Car insurance is a cost we can’t avoid, but there are ways to reduce it, such as improving vehicle security or adding a more experienced named driver to your policy.
“Ultimately, shopping around at renewal and finding the best price for you is the only way to know you’re getting the best price. And the sooner you do it after receiving your renewal notice, the bigger that saving could be.”
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