Why has car insurance gone up?

If your car insurance premium has increased at renewal, then you aren’t alone. While personal factors like your driving history have an impact, you might be surprised to hear there are many influencing factors out of your control. Here are some of the more recent factors affecting car insurance prices in 2025:

Car repair costs

• The cost of materials, labour and energy have all increased because of price-hikes and global conflict. This has made car repair claims more expensive for insurers, who then increase their customers’ premiums as a result.
• Newer cars are built to a higher specification and often feature advanced technology. All this comes with a higher price when it comes to repairs and replacements.
• Going green? Electric cars may be good for the environment but they’re 25% more expensive to repair than traditional engine cars.

The domino effect

• Everyone’s combined premiums must be able to cover the costs of all the claims made to an insurer. That’s why price increases can affect everyone – even if you personally haven’t claimed.
• We’re seeing a rise in supply chain issues which often affects the availability of spare parts. This has a knock-on-effect for insurers. For example, an extra week-long wait for new brake pads to be delivered means an extra 7 days your insurer will have to pay out for a replacement car.
• Car theft has been on the rise since 2015, bumping up premiums as insurers are paying out more for stolen vehicle claims.

Environmental and economic factors

• Did you know that car insurance inflation can rise quicker than general market inflation? Insurers sometimes increase their prices if they expect higher future costs.
• The UK has been hit by several storms in recent months. Extreme weather events often lead to bigger value claims. For example, cars suffering from heavy water damage.
• Have you heard of the Insurance Premium Tax? This tax applies to all general insurance products, including motor, and currently sits at 12%.

Looking to reduce your car insurance costs?

While you can’t control inflation or the weather, there are ways you can save on your car insurance policy. From increasing your voluntary excess to building your no-claims discount, we share some ways you can cut costs in our car insurance renewal guide.

And with costs rising, a good insurance broker can help you find the right cover at the right price. At Wesleyan Financial Services, our insurance brokers can advise you on your next policy and provide a quote from our panel of handpicked providers.

We also offer an exclusive car insurance discount for eligible Wesleyan members. We’ll pay 20% of your premium when you take out a policy with us.

Terms and conditions apply.