Car insurance prices are set to rise further, according to the largest motor insurer - despite already being at record highs.

Admiral, which owns car insurance brands such as Bell, Elephant and Diamond, this week said it had had to increase prices by 40 per cent over the past year.

The car insurer, which is the largest in the UK, this week published half-year results showing its motor insurance underwriting profits fell by 4.5 per cent, to £189.5million.

Admiral said it was suffering increased costs, which it has had to pass on to drivers in the form of higher premiums.

The insurance firm said rising energy costs added £71.75 to the cost of each car it repaired. Meanwhile the price of paint and repair materials have gone up by 16 per cent.

Dented profits: Admiral said the increasing cost of repairs was behind rising insurance costs

Admiral chief executive Milena Mondini de Focatiis told the Times: 'We expect to continue to increase prices.'

Motor insurance prices are already at record highs. The average driver now pays £511 a year for insurance, according to official data.

The price of typical car cover rose 7 per cent, or £39 a year, from the first three months of 2023 to the second quarter, according to the Association of British Insurers.

The ABI said the cost of replacement parts for many popular cars have increased between 12 -21 per cent over the past year.

Car repairers have faced a big hike in their costs, which they have passed on to insurers, and in turn to drivers.

For example, repairers have seen a 300 per cent rise in energy bills compared to before the cost of living crisis began in 2021.

The cost of providing a courtesy car has risen 30 per cent, and paint and part prices by 16 per cent.

How to save money on car insurance

Shop around

This is the number one way to save on car insurance. Drivers can make savings of hundreds of pounds if they shop around when renewing their cover.

Insurers are no longer allowed to charge renewing customers more than new ones. That means if a driver renews, they should be quoted the same - or less - than if they had started a new policy with the same insurer.

But prices vary between different insurers, so it is still possible to get a better deal by shopping around.

Consider 'black box' telematics insurance

Black box policies are where the insurer uses a system in your car to monitor your driving, either a separate device or using the driver's smartphone. These are designed to reward those who drive carefully.

They can cut premiums substantially once you start proving you are a good driver. Some insurers even offer an upfront discount if you take out a telematics policy.

Be careful about named drivers

Another way to cut premiums is to ensure that only regular drivers are named on the policy.

Adding a young, inexperienced driver can be a false economy, especially if you have a large or higher-powered vehicle.

The premium will be affected by the youngest driver, and he or she may not have a no-claims bonus.

Pay yearly if you can

When taking out a new policy, drivers will be given the option to either to pay for the whole year upfront or in monthly instalments.

Many opt for the monthly payments as it means not having to part with a large sum of money in one go – but if you can afford to pay your yearly premium upfront, you could save money.

This is because your insurer may charge you interest on the monthly instalments. It is worth asking them if there is a difference and, if so, what it is.

Only pay for what you need

Some car insurance deals include extra benefits, such as a courtesy car, windscreen cover, breakdown cover and motor legal protection.

All of these could definitely come in handy, but they will almost always increase the total cost of insuring your car.

Many consumers who buy add-on insurance then forget they have it, and some deals are only claimed on once every 664 years.