Transport for London has announced that nearly 165 miles (265km) of its roads are now subject to 20mph speed limits, a measure introduced in cities like London to enhance safety. Although controversial, these speed limits appear to be having a positive impact on car insurance costs. In September 2023, Wales also implemented a default 20mph limit in built-up areas. Despite initial backlash leading to some roads reverting to 30mph, the initiative has been linked to a significant decrease in vehicle damage claims and insurance prices.
A leading price comparison website reported the largest annual drop in UK car insurance prices in over a decade. The average cost of car insurance in the UK declined by £161, or 16%, over the past year. This decrease can be attributed, in part, to the introduction of 20mph speed limits. The chief executive of Confused.com highlighted these speed limits as a contributing factor to the fall in prices. The first indications of potential savings from 20mph zones were noted in June last year.
In Wales, where the default 20mph limit was introduced, vehicle damage claims fell by a fifth. The average price of a new car insurance policy now stands at £834. However, it is important to note that the average UK premium remains 33% higher than it was two years ago. Additionally, more than half of motorists who received renewal quotes during the last three months of 2024 reported an average increase of £78 in their premiums.
These developments suggest that while 20mph speed limits may not be universally popular, they could offer financial benefits to drivers. The reduction in car insurance costs could provide some relief amid rising premiums. As communities continue to assess the effectiveness and acceptance of these speed limits, their impact on insurance costs will remain a focal point for both policymakers and drivers.