Further car insurance hikes expected
Car insurance premiums are going up in price again, according to the latest AA’s British Insurance Premium Index.
It’s not just fuel prices that are costing drivers precious pennies, with drivers having to pay an extra £20 for a typical comprehensive insurance premium and a steeper £45 for third party cover.
Viewed as an industry benchmark for measuring premium trends, the AA index tracks 1,000 motor risks against premiums from 85 insurers, brokers and insurance schemes. Average comprehensive premiums cost now stands at £702.47 compared with £681.93 in April this year.
This increase of 3% in just three months compares to the 5.8% change in price over the whole of last year, when comprehensive premiums cost £664.15.
Just like the sudden leap in petrol prices over a relatively short space of time, car insurance premiums are set to rise in price more quickly than they have been.
Director of AA Insurance, Simon Douglas, confirms that cost of car insurance is likely to continue to rise, potentially pricing out younger drivers.
"Car insurance costs are spiraling. While the number of casualties on Britain’s roads is falling, the cost of accidents is rising and young drivers are taking an increasing share of the toll," he adds. "Insurers are also concerned about rising legal costs and personal injury claims and I expect the upward trend in premiums to continue."
Young drivers tend to buy third party, fire and theft insurance, which is not only more expensive than comprehensive cover but is also experiencing greater price hikes. In the last quarter, the premium price of an average third party policy has risen from £838.50 to £883.96.
This is up 11.9% on last year’s price which stood £790.02%.
"At a time when consumers are feeling the pinch in all aspects of their lives, it can be disheartening to learn that car insurance premiums are rising by up to 10% this year," says Mark Vile, spokesman at comparethemarket.com.
Aside from using price comparison sites, Vile recommends that drivers keep their cars in garages, don’t make any modifications and keep a clean licence - stopping at red lights and driving to speed limits will help keep costs down as well as make for safer driving.
A standard by which something is measured, usually the performance of investment funds against a specified index, such as the FTSE All-Share. Active fund managers look to outperform their benchmark index. Cautious fund managers aim to hold roughly the same proportion of each constituent as the benchmark, while a manager who deviates away from investing in the benchmark index’s constituents has a better chance of outperforming (or underperforming) the index.