Cost of running a car now £500 higher after fuel and insurance rises

The cost of running a car has risen by 17pc to almost £ 3,600 a year in the face of soaring prices at the pumps and higher insurance premiums.

Drivers will spend £3,556 this year to maintain their vehicle, a rise of more than £500 from £3,049 in 2021, according to analysis by Insurance Revolution, a specialist broker.

The rise has largely been driven by huge jumps in fuel prices, which have surged to record heights this year. Someone who drives an average mileage will spend £1,435 to fill up their car this year, up from £951 last year, according to Insurance Revolution.

Petrol and diesel prices have risen so rapidly that some drivers have avoided the roads altogether. A recent report by the AA, the motoring association, found that motorists were staying at home to avoid filling up at the pumps or running out of petrol.

Drivers must also budget for road tax and car insurance, which have both gone up in price this year.

Motor premiums have risen by 4.3pc since the beginning of 2022 and an average policy costs £697, according to Consumer Intelligence, an analyst.

Insurance premiums rose at the beginning of the year when the Financial Conduct Authority, the City watchdog, banned the so- called “loyalty penalty”, preventing insurers from offering cheaper deals to new customers at the expense of those renewing their policies.

Louise O’Shea of Confused.com, a comparison website, said: “The main reason car insurance costs are starting to increase is that we’re driving a lot more now than we were 12 months ago. This means the number of claims that insurers are paying out on is likely to have increased too.

“It’s worrying that so many people believed the pricing changes that came into effect in January would guarantee them a lower price, and I have no doubt they had quite a shock when they received their renewal notice and it was higher.”

Costs vary according to where you live. Drivers in inner London pay the most for their insurance, at £864 a year on average, according to Confused.com, while motorists in the Scottish Borders pay £370.

Older drivers have been disproportionately stung by higher car insurance costs, with premiums for the over- 50s rising faster than in any other age group. Prices for older drivers have risen by 6.2pc in the past three months, according to Consumer Intelligence, while motorists aged 25 to 49 saw increases of 4.1pc. Meanwhile, average premiums for the under- 25s fell by 2.3pc.

Ms O’Shea added: “It’s very likely there will be another insurer that can offer a better price for the cover you need, so it is essential to shop around.”