Car insurance premiums dip slightly - Car insurance - News |

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Car insurance premiums dip slightly

Car insurance premiums dip slightly

Category: Car insurance

Updated: 26/11/2012
First Published: 19/10/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Car insurance premiums registered a slight fall in the third quarter of the year, but remain historically high.

The AA said that its research showed that the average cost of a fully comprehensive car insurance policy had fallen by £2 to £921 per annum in the three months to the end of September.

Motorists have been hit hard by the rising cost of insurance while prices at garage forecourts have also spiked, before levelling out recently.

At the end of March this year, premiums had risen by more than 40% in just 12 months.

That annual rise has now fallen to 16%, giving motorists hope that the worst of the rises may have come to an end.

"The past two years have seen the biggest-ever rises in premiums as insurers struggled to close a widening gap between premium income and claims costs," Simon Douglas, director of AA Insurance, said.

"Although historically costs had been rising, premiums had not and, at the end of 2009, for every £100 taken in premiums £123 was being paid out. Something had to give."

"But the gap has now closed sufficiently to allow insurers to start pricing more competitively once again."

However, he warns there are still inflationary pressures for insurers and that the respite may be short lived.

"I believe that this fall is a respite rather than the start of a trend. Premiums are likely to continue rising next year, but at a much more modest rate," he added.

Figures from the motoring association and insurer also found that the average price of building insurance has risen by 14% in the last 12 months, up to £152 per year.

Also up is the cost of contents cover, with the average price rising by 6% to £77 a year since September 2010.

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 Any products featured may be withdrawn by their provider or changed at any time.