Car insurance Updated:
Over the last few years motorists have been enjoying falling car insurance prices, but in the period between July and September the first rise in three years occurred, begging the question of whether car insurance costs would start to spiral. However, according to the latest AA British Insurance Premium Index, this upwards trend stalled at the end of 2014 – but for how long?
Figures from the AA index reveal that the average car insurance premium for comprehensive cover rose by only £1 in the last three months of 2014, a 0.2% increase from £539.19, which was the average in the previous three-month period. This represents a noticeable cooling from the price rise that took place between July and September, when premiums increased by 1.2%.
Regionally, the biggest insurance increases were faced by those living in East Anglia. Premiums in this area rose by 1.8% in the last three months of the year, bringing the average to £494. Meanwhile, Northern Ireland saw the biggest drop in the cost of car insurance premiums, although the prices here are the highest out of all regions in the UK. Prices fell by a surprising 2.2%, giving an average premium of £815.
Price rises may have faltered for the moment, but does this mean that motorists can continue to enjoy low car insurance premiums? Well, according to Janet Connor, managing director of AA Insurance, we should enjoy it while we can and brace ourselves for future increases.
Up until now, fierce competition in the car insurance market has driven prices down, resulting in premiums at the end of 2014 being 10% cheaper than they were a year ago. However, this pricing is "simply unsustainable", argues Ms Connor.
The reason for this is that car insurance companies are still battling with the costs of fraudulent or exaggerated personal injury claims. Although the Government has tried to tackle this issue with legislation, the number of personal injury claims has actually risen since the reforms were introduced. But if this is the case, why did price rises slow at the end of 2014?
Ms Connor explains: "Car insurance is extremely competitive… Some insurers may have lost business by increasing premiums [in July to September], leading to a 'year-end sale' to boost market share, so car insurance is still very good value.
"Nevertheless, the underlying trend is upward, although I think premiums will struggle to rise past 10% by the end of the year."
Now that price rises are on the horizon, it is the perfect time to make sure you have the best car insurance for the best price. If your policy is due to expire soon, take advantage of the current low prices and shop around for the best possible deal. You can begin your search with our handy price comparison tool. Remember to weigh up special offers and discounts carefully, and thoroughly explore your options before buying. This way, you can ensure that you get the best deal possible.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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