Car insurance premiums back on the rise

car on coins

The cost of insuring a car is once again on the rise - increasing by 4.3% in the last three months, according to the latest AA Premium Index.

Following six months of relatively little premium movement, this new spike brings the average 'shoparound' premium to £1,034 and represents an increase of 8.5% over the last 12 months.

But while average costs were rising, Simon Douglas, director of insurance at AA, said that some insurers were still cutting prices.

"Competitive pressure is leading some companies to make big premium cuts on price comparison sites so that they can increase their portfolio of customers. While this is great news for consumers, they need to make sure they're getting good cover, not just a good price."

Shop around

Scott Kelly, head of car insurance at GoCompare advised motorists to diarise enough time to shop around ahead of their next renewal. "It can be a dangerous time for drivers when the market splits like this – some insurers are driving through premium increases while others are slashing prices. 

"Each insurer has a totally different view of each driver and if you stick with the wrong insurer this year you could be seriously out of pocket."

According to GoCompare's research the difference between the average comprehensive policy and the shoparound price on a comparison site now stands at a staggering £403.

Douglas blamed spiraling prices on fraud and a growing number of whiplash claims.

"Insurers are still handling excessive numbers of costly whiplash injury claims as well as fraudulent 'cash for crash' claims and 'ghost' broking set-ups, who sell seemingly valid insurance policies using false information. 

"However, significant inroads are being made by insurance fraud specialists including the new police Insurance Fraud Enforcement Unit, which has already smashed a number of insurance scams," he said.

Douglas also warned that insurers are increasingly targeting motorists who withhold or conceal important information during the application process. "We expect the industry eventually to have routine access to DVLA data and the sooner this happens the better. 

"It will allow fraudulent applications to be weeded out," he said. "Insurance companies are already exchanging information about people who appear to be manipulating data on order to cut the price quoted."