Motor insurance premiums across the UK saw a slight uptick in the first quarter of 2026, averaging £560. This marks a £1 increase from the final quarter of 2025 but remains £20 below the same period in 2025.
Claims and Repair Costs Climb
Insurers disbursed £2.9 billion in claims over the first three months, including £1.9 billion for vehicle repairs—a 3% rise from the prior quarter. The average claim for accidental damage reached £3,699, up 8% quarter-on-quarter.
Experts link these higher costs to elevated parts prices, greater vehicle complexity, extended repair times, and supply chain issues, which also impact related expenses like vehicle hire.
Chris Bose, director of general insurance and international at the Association of British Insurers (ABI), stated: “It’s encouraging to see motor insurance premiums have remained stable in the first three months of this year, underlining the industry’s efforts to tackle costs. However, the sustained high costs of repairs continue to be a concern. Working with our members and Government, we’ll maintain momentum to drive forward the work of the Motor Insurance Taskforce to support motorists.”
Iran Oil Crisis Drives Fuel Price Surge
The ongoing Iran oil crisis has added £2 billion to UK drivers’ fuel bills in just over a month. Analysis reveals that since the Middle East conflict erupted on February 28, petrol costs have risen by £500 million and diesel by £1.5 billion.
The Treasury has collected an extra £336 million in VAT from these higher pump prices, calculated from average daily increases and last year’s consumption data. VAT applies at 20% atop the product price and fuel duty of nearly 53p per litre.
Steve Gooding, director of the RAC Foundation, noted: “This is another unwelcome milestone for millions of motorists as the financial pain caused by the war in the Persian Gulf continues to mount up. As ministers themselves have warned, the economic effects of the conflict could last for months even after it has ended. The owners of diesel vehicles have borne the largest brunt of the pump price hikes, many of whom will be commercial users with little choice but to pass on their costs to their customers. Whether we are drivers or not, we all end up feeling the pinch from sky-high forecourt fuel prices.”
