Car Insurance Premiums Surge 11.4% in Portugal — Young Drivers and Rural Areas Hit Hardest

Car insurance premiums in Portugal have jumped by an average of 11.4 per cent at renewal, according to an analysis of 409 policies by digital insurance broker Mudey covering eight major insurers between October 2025 and February 2026. The average annual premium now stands at approximately €344, though 77 per cent of policies remain below €400 per year.

The increases are not evenly distributed. Drivers aged 25 to 29 and those over 65 face the steepest hikes, with premiums climbing by around 16 per cent — well above the national average. Portugal’s interior regions are similarly penalised, recording average increases of 15 per cent compared with roughly 11 per cent along the coast. The Azores saw the smallest rise at about 7 per cent, while Madeira and the Aveiro district came in at around 9 per cent.

Why Are Premiums Rising?

Mudey co-founder Ana Teixeira pointed to three structural cost drivers behind the surge. First, vehicle repair costs have risen sharply as modern cars incorporate increasingly sophisticated technology — from advanced driver-assistance systems to electric drivetrains — making bodywork and mechanical repairs significantly more expensive than a decade ago.

Second, the cost of travel assistance services has climbed in tandem with fuel prices. With diesel having recently broken the €2-per-litre barrier in Portugal for the first time, the knock-on effect on roadside assistance and towing services feeds directly into insurers’ claims costs.

Third, a broader trend of reduced vehicle maintenance means insurers are paying out more frequently for breakdowns and mechanical failures that might have been prevented with regular servicing.

Payment Method Matters

How drivers pay also affects the size of the increase. Those who pay monthly or quarterly saw premiums rise by 16 per cent on average, compared with 11 per cent for annual payers. Insurers typically apply a financing surcharge to instalment plans, and that surcharge has widened as interest rates have risen. For cost-conscious drivers, switching to annual payment can therefore yield meaningful savings.

What Expats and Foreign Residents Should Know

Portugal requires all registered vehicles to carry at minimum third-party liability insurance (seguro de responsabilidade civil). For newly arrived residents importing a vehicle or buying one locally, the initial premium can be higher due to a lack of Portuguese claims history. Some insurers accept a no-claims certificate from the driver’s home country, but this is not universal.

Comparison platforms such as Mudey, Reorganiza, and ComparaJá allow residents to benchmark quotes across multiple insurers — a step worth taking given that the analysis shows considerable variation between providers and regions.

With fuel costs, insurance, and vehicle taxes all trending upward, the total cost of car ownership in Portugal continues to climb — adding to the broader cost-of-living pressures that have become a defining political issue in 2026.