Car insurance premiums have risen by 16 per cent in a year, as insurers say they are forced to pass on the soaring cost of repairs.

The average premium paid for comprehensive motor insurance was £478 in the first three months of this year, according to new data from the Association of British Insurers.

That is up 16 per cent on the same period in 2022, and is the highest level since the £483 premiums seen in the final three months of 2019.

The reason for rising premiums is a storm of increased costs for insurers - mostly repairs, according to insurance firm Direct Line and the ABI.

Jonathan Fong, ABI senior policy adviser on motor insurance, said: 'With households battling the rising cost of living, the last thing anyone wants is a higher motor insurance bill.

'Naturally, every motorist wants the best insurance deal, and insurers are doing all they can to keep motor insurance as competitively priced as possible. Yet, like many other sectors, insurers continue to face higher costs. 

'The price of certain raw materials and energy costs are rising at rates well above general inflation, and these costs are becoming increasingly challenging to absorb.'

Increasing car repair costs

Energy bills - up 300%

An ABI spokesperson said gas and electricity bills for car repairers have risen by 300 per cent, taking average energy costs per repair to £70.

This is worsened by the fact that vehicle repairers need to use large amounts of power, an ABI spokesman said,

This is passed on to consumers as increased premiums.

Paint and parts - up 16%

Insurance premiums are also being pushed up by the rising cost of paint and a shortage of car parts.

The lack of parts started with the global semiconductor shortage during the worst of the pandemic, which manufacturers are still grappling with.

More than a third of the price of a new car is microchips and semiconductors, according to insurance firm Saga.

The Russian war on Ukraine has also worsened the shortage of parts.

For example, the average car has more than three miles of wiring inside it, which is kept organised with wire harnesses.

Ukraine was a major manufacturer of wire harnesses, and the conflict has led to a lack of components for carmakers such as BMW, Porsche and Volkswagen.

Overall, shortages of parts and labour have increased the average time to repair a car with minor damage from the norm of 13 days to 17 now. 

For cars that are damaged so badly as to be undriveable, that time has risen further - from 26 to 39 days.

Meanwhile paint costs are also rising - in part, insurers say, because the finish expected on modern cars is more professional than in the past, and because cars are larger - so need more paint.

But the increasing cost of paint is also due to oil prices, which, while falling, are still historically high.

Courtesy car costs - up 30%

With cars spending longer being repaired, there is greater demand for courtesy cars, which means prices have risen by almost a third.

That price is paid by drivers, as higher premiums. 

In response, rather than paying to repair a crashed car some insurers now ask to buy it off its owner then sell it for scrap to swerve the cost of getting it fixed.

Labour costs - up 7.5%

Wages for car repair workers are also rising, which is passed on to insurers - and then to drivers.

These salaries are going up due to a shortage of mechanics, which began after Brexit, as well as growing employee demands for greater wages to help with the cost of living crisis.

Second-hand car costs - up 30%

The value of used cars has been rising as the parts shortage led to fewer new ones for sale.

The average price of a used vehicle has increased by 30 per cent, or £4,119, in three years, according to Auto Trader.

That in turn means rising insurance costs, as the value of the vehicle being insured is higher.