Car insurance premiums are the latest victim of the increased cost of living. Costs are currently up 40% on last year, due to a jump in the number of claims and also more expensive repairs. But some areas of the UK are harder hit than others.
Premiums are calculated from many variables, not least location. Population density, crime rates and the number of road accidents in your area are just some of the factors that insurers consider when deeming how likely you are to make a claim.
To determine where drivers are paying the most and least – and thus where the highest and lowest risk is – CarMoney sought average car insurance quotes for each of the UK’s 123 postcodes.
Key Findings:
- The most expensive postcode for drivers is Liverpool at £1,158.72 per year
- The cheapest postcode is Inverness at just £386.66 per year
- More than half of the safest postcodes are in Scotland
- The average UK insurance premium is £752.26 per year
- Combined, Birmingham is paying more for car insurance than anywhere else in the UK – £1,076,234,607 per year
- Lerwick, Scotland, is paying the least in total insurance costs – £5,786,207.72
Liverpool drivers deemed most likely to make a claim
We found drivers in Liverpool are paying the highest premiums in the UK, meaning insurers deem drivers in Merseyside the most likely to make a claim. At £1,158.72 per year, Liverpool’s premium is £406.46 above the UK average of £752.26.
This shows the North West city has a high risk likelihood – how likely drivers in that area are to make a claim for an accident or car-related crime – that is 1.54 times the average.
Motorists around the capital pay among the highest premiums
Luton follows as the second most expensive postcode, just 82p cheaper than Liverpool with a premium of £1,157.90 and tied on an increased risk likelihood of 1.54 times the average.
In third is East London, costing its drivers £1,147.90 annually – just £10 less than those in Luton – and then Sheffield (£1,058.47) and Derby (£1,044.83).
Seven of the ten highest-risk postcodes are in the South and Midlands
London commuter town Slough places just outside the five most expensive postcodes with an average yearly premium of £1,037.34, followed by Manchester (£1,027.87), Enfield (£1,020.05), Southall (£1,013.28) and Wolverhampton (£1,010.21).
These towns and cities have an increased risk likelihood of between 1.38 and 1.34 times the UK average.
Of the ten highest-risk postcodes, seven are in the South or Midlands.
Drivers in the lowest-risk postcode pay just a third of those at the highest risk
Getting the best deal are drivers in Inverness, Scotland. Paying just £386.66 per year, motorists in the UK’s most northerly city are saving £365.60 on average each year – that’s a 51% drop.
Inverness insurance premiums are also just a third of those in Liverpool, the most expensive postcode in our study (£1,158.72 per year).
Scotland is the safest UK country for road accidents and car crime according to insurance premiums
In fact, Scotland outscored all other UK nations (England, Northern Ireland and Wales) as sIx of the ten lowest-risk postcodes are found north of the border.
Inverness, Falkirk and Stirling, Lerwick, Dumfries and Galloway, Galashiels and Aberdeen have average car insurance premiums of between £386.66 and £522.20 – based on risk likelihoods that are as little as half the UK average (0.51 times in the case of Inverness).
Cambridge, Carlisle and Chester are the only areas of England to appear in the top ten, with premiums of £421.45-£522.97, with Llandrindod Wells (£455.17) making up Wales’ only appearance at this end of the results.
The average cost for car insurance across all postcodes in Scotland is just £577.91 per year, down on England (£789.17), Northern Ireland (£624.73) and Wales (£600.37).
Drivers in Birmingham spend a combined £1.1 billion on car insurance each year
We also calculated the totals spent on car insurance per postcode, using the average insurance premium and local driving population.
While Birmingham’s average premium (£925.57 per year) doesn’t feature among the most expensive in our research, motorists in the UK’s second-largest city pay a combined total higher than anywhere else – due to having the biggest estimated driving population (1.2 million).
Each year, we estimate UK insurers make a staggering £1.1 billion from drivers in Birmingham – that’s almost five times the average total per area (£247 million) and equivalent to 4% of UK car insurance revenue.
Liverpool, despite having the highest premium (£1,158.72), managed ‘only’ the eighth-highest combined cost of insurance at £606 million.
Combined, drivers in Lerwick, Scotland, account for 0.02% of yearly UK car insurance costs
By stark comparison, drivers in Lerwick, Scotland, spend a combined £5.8 million on car insurance, meaning their contribution to the insurers’ yearly revenue is 186 times smaller than Birmingham’s and just 0.02% of the total UK figure.
Following the trend found in other sections of our study, Scotland accounts for seven of the ten locations with the lowest total insurance spends. English postcodes make up eight of the ten locations with the largest total insurance spends.
Five tips for keeping the cost of car insurance down
With car insurance costs on the rise, it’s worth looking for ways to keep your quotes down. You shouldn’t knowingly give false information, of course, such as estimating an unrealistically low mileage, but there are steps you can take.
Below, we run through some tips that might help lower your premium:
Don't automatically accept your renewal quote
Often insurers will quote a renewal premium that’s more expensive than your current, even if the terms remain the same and no claims have been made. With 2023 premiums currently costing 40% more than last year’s, you mightn’t find a cheaper deal elsewhere, but you could find one with a smaller increase. Be sure to shop around.
Add experienced drivers
Adding additional, experienced drivers can help lower the costs, as insurers expect more seasoned motorists to have a lower risk of making a claim. Just make sure any additional drivers would reasonably be expected to drive your car and that they don’t have any unspent motoring convictions – as this may make them a greater risk in the eyes of insurers.
Consider paying annually
Although it could cost a lot more initially, paying your premium annually will save on the interest that’s added to monthly instalments. There’s also the added bonus of not having to worry about car insurance costs for another 12 months – according to the average UK premium we calculated, that’s upwards of £60 (plus interest) back in your pocket each month.
Consider alternate job titles
Different job titles, even in the same field, can alter insurance quotes. Try a few alternate occupations to see if these bring the costs down. Just ensure any titles you try are still an accurate fit for what you do.
Pay a higher excess
Paying a higher voluntary excess – the amount you will pay in the event of a claim – will reduce the overall premiums quoted. However, select an appropriate amount that you wouldn’t struggle to pay. Also, you won’t be able to claim if the value of the damage is less than your voluntary and compulsory excess combined.
Find out more about car finance at CarMoney today, or check our blog for more news and insight.
Methodology
We created a typical UK driver profile based on average figures such as mileage (6,800 per year according to NimbleFins) and age (40, according to the 2021 Census).
To determine average car insurance premiums for each of the UK’s 123 geographic postcode areas, this profile was used to obtain quotes on price comparison site MoneySuperMarket. Address was the only variable. A random specific postcode for each area was taken from Find that Postcode. The cheapest premium was taken for each postcode, including policies with a telematics device.
Total insurance costs per postcode were calculated by multiplying the average premium of each area by the estimated number of drivers. This estimate was calculated by applying the proportion of UK population that drives to the population of each postcode.
Posted 19/10/2023 Back to Blog
