Supply chain disruption has become a global issue for businesses in the last few years especially and it can be caused by a variety of factors. In the last instalment in this series, we investigated how disruptions in the supply chain have impacted businesses in recent years and what businesses need to be aware of in 2025.
This article serves as part two in this series and will focus on how supply chains are affecting car and home insurance.
The rising costs of insurance
According to the latest data from the Association of British Insurers (ABI), in the last year alone, the average price of home and contents insurance has risen 16% to £407.
Car insurance prices, however, are finally starting to decrease. After several years where we saw steep increases in car insurance prices leading to record-high prices, 2024 saw a turning point for the average cost of car insurance.
As of January 2025, the average cost of car insurance is 16% cheaper than it was twelve months previously. That being said, we must take into consideration that the average cost of car insurance in the UK is still a whopping £834. So, although we are finally seeing progress, this decrease is calculated using an already high baseline and prices are still very high.
The question is, what do these rising costs have to do with supply chain disruptions?
How are supply chain disruptions impacting home and car insurance?
Several issues in the supply chain have come into play which may have collectively pushed the insurance industry to increase premiums.
Due to supply being unable to meet demand, manufacturers have been forced to inflate prices. The availability of parts and materials, labour shortages, rising price of electricity and gas, and the geopolitical landscape are all potential contributors to insurance premiums rising.
What can I do to reduce the cost of insurance?
There are a number of things you can do to try to mitigate insurance costs hikes and reduce your premium, including:
- Avoid monthly payments
Although it is tempting to spread the cost of insurance over the year - especially when facing such high premiums - in the long run this could work against you. Since you will be paying interest on your policy each month, over the course of a year, you may find this adds a significant amount to your overall premium. Where possible, try to pay your premium in one lump sum.
- Don’t auto renew
Some insurers bank on the hope that you don’t shop around and that you chose to auto renew your policy. Do not fall into this trap, make sure to shop around and get quotes from different insurers, as well as contacting your current insurer to see if they can do better. Comparison websites can be especially helpful for those with limited time but be aware than some insurers aren’t on these websites, so don’t limit yourself to solely comparison sites.
- Invest in a black box
For car insurance policies specifically, if you are a young driver or you have recently passed your driving test, consider investing in a black box to lower your premiums. Bear in mind that premiums only reduce if you are driving lawfully, bad driving will only serve as evidence to raise your premiums. The black box can monitor if you are speeding, accelerating or braking too suddenly and even if you are going round corners too fast.
- Ensure your details are up to date
Keeping your policy details up to date is crucial for keeping your premiums low. Failing to do so may mean your paying for extras that you don’t need or use, such as business travel, named drivers who don’t use the car, more mileage than you in fact clock up etc.
- Think carefully about which car you purchase
The make and model of your car has a direct impact on the cost of your insurance. If you opt for a sporty number over a small hatchback, you’ll see a big difference. Cars are categorised into different groups based on the safety features, the state and history of the car etc and then premiums are calculated accordingly.
- Speak to an insurance broker
With the help of an insurance broker, you can find the right policy for your individual needs. Your insurance broker can compare prices and policy specifics from insurance providers that may not be on price comparison websites and may be able to unlock more competitive prices.
Home and car insurance tailored for you
We offer specialist home and car insurance policies tailored to your needs. Contact your usual Towergate advisor today to find out more.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems, we recommend that professional advice be sought.
Sources:
1:Year-to-date property claims payouts hit £4.1 billion | ABI
2: Has car insurance gone up in 2025? - Confused.com
