Millions cut down on car insurance cover as cost pressures bite, study finds

Daniel Bevan - Editor

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Around one in eight adults in the UK have cancelled, reduced or gone without car insurance cover in the past year as household budgets remain under strain, according to new analysis drawing on official data.

Figures from the Office for National Statistics show that the poorest fifth of households cut spending on vehicle insurance by 36% in real terms in the financial year ending 2024.

The data suggests lower-income families have responded to rising premiums by switching to cheaper policies, insuring fewer vehicles or reducing the number of named drivers.

Separate analysis by Brumble, based on the Financial Conduct Authority Financial Lives 2024 survey, indicates the shift extends well beyond the lowest earners.

Key findings from the study show:

12% of adults, equivalent to around 6.4 million people, cancelled a policy, reduced their level of cover, or chose not to buy insurance in the past 12 months because they could not afford it or wanted to save money.
15% of motor insurance policyholders have reduced their level of cover in the past two years.
61% switched provider when taking out their most recent policy, up from 52% in 2022.
25% of drivers aged 25–34 reduced their motor insurance cover in the last two years, compared with 7% of those aged 75 and over.
17% of adults aged 25–34 cancelled, reduced cover or chose not to buy insurance to save money, the highest proportion of any age group.

The FCA survey also found that among those paying monthly instalments, 13% have missed a payment or struggled to keep up over the past two years. Among those already in financial difficulty, that figure rises to 34%.

Lower-income households remain the most exposed. Sixteen per cent of people earning under £15,000 a year reported cancelling, reducing or not purchasing insurance.

Renters were twice as likely as outright homeowners to take similar action, while 16% of adults identified as vulnerable also reported cutting back.

The data comes as the Association of British Insurers reported record motor claims payouts of £11.7bn in 2024, driven by higher repair costs, vehicle theft and the increasing complexity of modern car technology.

Although average premiums have fallen for several consecutive quarters, reaching £551 in the ABI’s third-quarter 2025 tracker, many drivers remain tied to policies agreed during the peak pricing period of 2023–2024.

Ryan Hughes, Founder of Brumble, said: “These figures paint a clear picture: drivers across the UK are being forced to make difficult choices about their car insurance.

“For many, that means shopping around more aggressively, accepting higher excesses, or cutting cover they might previously have considered essential.

“What concerns us most is the 12% who have reduced or dropped cover entirely.

“With repair costs at record highs and the average claim now exceeding £4,900, being underinsured can leave drivers exposed to significant financial risk if the worst happens.”