Car insurance costs motor upwards - Insurance - News - Moneyfacts

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Car insurance costs motor upwards

Car insurance costs motor upwards

Category: Insurance

Updated: 26/11/2012
First Published: 19/07/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Drivers looking to renew their car insurance cover could be forgiven for feeling some trepidation after figures showed that premiums are rising at their fastest rate ever.

In the three months to the end of June, the average cost of cover on the road shot up by more than 11%, according to the AA.

Somebody shopping around for an annual comprehensive car policy can now expect to pay a price of £704.

This 11.5% rise is the biggest surge seen in costs over a three month period since the figures were first released 16 years ago.

The trend has been blamed on increasing levels of fraud, and drivers have been warned to expect the price of insuring their vehicle to increase yet further.

An increasing number of personal injury claims following car accidents have also helped drive the cost of insurance upwards.

"Insurers have been making huge underwriting losses – some estimates suggesting that for every £1 taken in premiums, £1.22 is being paid out in claims," said Simon Douglas, director of AA Insurance.

"Since January last year, average quoted premiums have risen by over 30% and I won't be surprised if, by the end of 2010, we'll have witnessed an unprecedented 50% rise in just two years."

Figures show that it is young drivers who have most to fear from the most recent rises, as the cost of third party, fire and theft (TPFT) has shot up by 15.8%.

The average price of TPFT cover at the end of June was £1,224.99 a year.

"More and more insurers are withdrawing this type of cover because it is unprofitable. In a few years it could well disappear altogether," said Mr. Douglas.

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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 Any products featured may be withdrawn by their provider or changed at any time.

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