How Are Rising Car Insurance Costs Affecting UK Drivers in 2026?

UK Car Insurance Report 2026: How Rising Costs Are Changing Driver Behaviour

New analysis by Brumble, drawing on official data from the ONS and FCA, reveals that millions of UK drivers are cutting back on car insurance cover, shopping around more aggressively, or going without protection altogether as household budgets remain under pressure.

Key Findings At A Glance

What The ONS Data Tells Us

The Office for National Statistics' Family Spending report, published in September 2025, reveals a stark picture of how the cost-of-living crisis has affected vehicle insurance spending across different income groups.

According to the ONS, the poorest fifth of UK households reduced their spending on vehicle insurance by 36% in real terms in the financial year ending March 2024. The data shows these households either:

• Switched to cheaper insurance alternatives
• Reduced the number of insured drivers in the household
• Insured fewer vehicles altogether

While the richest fifth of households also reduced their insurance spending (by 14% in real terms), the gap highlights how cost pressures are disproportionately affecting those with the least financial cushion.

FCA Findings: How Drivers Are Responding

The Financial Conduct Authority's Financial Lives 2024 survey, based on nearly 18,000 UK adults, provides the most comprehensive picture of how people are actually changing their insurance behaviour.

Cutting Back On Cover

The FCA found that 12% of UK adults — equivalent to around 6.4 million people — took at least one of the following actions in the 12 months to May 2024 to save money or because they couldn't afford their insurance premiums:

Action taken	% of UK adults
Chose not to buy an insurance policy	6%
Reduced the level of cover on an insurance policy	4%
Cancelled an insurance policy	3%
Any of these actions	12%

Reducing Motor Insurance Cover Specifically

Looking specifically at motor insurance, 15% of policyholders reduced the level of cover on their policy in the last two years to cut costs. This includes both reducing cover on existing policies and opting for new policies with less protection.

Demographic group	% who reduced motor insurance cover
Adults with low financial capability	29%
Adults aged 18-24	25%
Adults aged 45-54	23%
Adults with low financial resilience	22%
Women	19%
All motor insurance holders	15%
Adults aged 75+	7%

Who Is Most Affected?

The FCA data reveals significant variation in who is being forced to cut back on insurance protection:

By Age

Age group	% who cancelled, reduced or didn't buy insurance
25-34	17%
35-44	16%
18-24	12%
45-54	13%
55-64	11%
65-74	9%
75+	7%

By Housing Situation

Housing tenure	% who cancelled, reduced or didn't buy insurance
Renters	16%
Other tenure	15%
Mortgage holders	13%
Own outright	8%

By Household Income

Household income	% who cancelled, reduced or didn't buy insurance
Less than £15,000	16%
£15,000 - £30,000	15%
£30,000 - £50,000	13%
£50,000+	11%

The Switching Surge

One clear response to rising costs has been a dramatic increase in shopping around. According to the FCA data:

This is supported by separate industry analysis from LexisNexis Risk Solutions, which found that one in four consumers switched motor insurance provider in 2024, compared to one in five in 2023.

Why Are Drivers Switching?

Among those who switched motor insurance provider in the last year, the overwhelming reason was cost:

Reason for switching	% citing this reason
Premium was too high	89%
Policy excess was too high	11%
A financial incentive offered by a different provider	6%
Policy coverage was not what I needed	3%
Other charges were too high	4%

Who Is Least Likely To Switch?

While switching is at record levels, some groups are less likely to shop around:

• Adults from minority ethnic groups: 42% switching rate vs 63% for white adults
• Those with "other" employment status (students, carers, long-term sick): 41% switching rate
• Adults with poor health or progressive conditions: 52% switching rate

This suggests that barriers to switching — whether time, complexity, or access to comparison tools — may be preventing some of the most financially pressed groups from finding better deals.

Payment Struggles

The FCA data also reveals concerning levels of difficulty in keeping up with insurance payments:

Monthly Payment Reliance

Among adults holding motor, home, or pet insurance:

• 49% pay their premium in monthly instalments rather than annually
• This rises to 81% among those in financial difficulty
• 72% of lone parents pay monthly
• 69% of those with low financial resilience pay monthly

Missing Payments

Among those paying in instalments:

• 13% have either missed a payment or found it difficult to make payments in the last 2 years
• This rises to 34% among those with low financial capability
• 25% among those who chose instalments because they can't afford a single annual payment

What This Means For Drivers

The data paints a clear picture: UK drivers are under significant financial pressure when it comes to car insurance, and many are responding by cutting back on protection or shopping around more aggressively.

The Good News

• Premiums are falling: The ABI reports the average premium is now £551 (Q3 2025), down £56 year-on-year
• Shopping around works: With 61% of drivers switching provider, competition is fierce
• The loyalty penalty is gone: FCA rules mean insurers can't charge existing customers more than new ones

The Concerns

• Underinsurance risk: 15% of drivers have reduced their cover — potentially leaving gaps if they need to claim
• Claims are expensive: The average claim exceeded £4,900 in 2024, up 13% on the previous year
• Some groups are missing out: Those who could benefit most from switching are often least likely to do so

What Drivers Can Do

1. Compare quotes before your renewal: Even if premiums are falling overall, your individual renewal may still increase. Comparing could save you hundreds.
2. Think carefully before reducing cover: Cutting to third-party only might seem cheaper, but comprehensive cover is often similarly priced and provides much better protection.
3. Consider your excess carefully: A higher voluntary excess can reduce premiums, but make sure you could afford to pay it if you needed to claim.
4. If you're struggling, speak to your insurer: Insurers have committed to ABI Premium Finance Principles around fair treatment. If you're finding payments difficult, they may be able to help.

Methodology And Sources