Car insurance premiums on the rise
After almost three years of falls, car insurance premiums are on the rise once again, with a 1.2% increase between the second and third quarters of 2014, according to the AA's British Insurance Premium Index.
This translates to a £6 rise in premiums for the average annual comprehensive car insurance policy, taking it to £531 - the first rise since early 2012.
However, the average of all quotes rose by 4.2% to £891 in the three months to the end of September, indicating that steeper car insurance premiums could be on the way, the AA said.
The organisation said Ministry of Justice reforms to the way in which it treated whiplash injury claims (the so-called Legal Aid, Sentencing and Punishment of Offenders measures) had done little to cut the number of fraudulent and exaggerated claims.
Janet Connor, managing director of AA Insurance, said: "[At the end of 2011], insurers reduced prices in anticipation that the reforms then promised by the Ministry of Justice. But the truth is, falling premiums had more to do with competitive tension than any benefit afforded by reforms. Premiums are, on average, now similar to their 2010 level and are no longer economically sustainable."
The AA said there is evidence to indicate that criminals are finding ways to avoid detection, with a surge in the number of ‘cash for crash' claims, where a driver deliberately brakes in order to cause the vehicle behind to crash into the rear. The driver then claims from the innocent party's insurance company for whiplash injury to themselves as well as sometimes-fictitious passengers.
It is estimated that fraudulent claims add around £90 to the cost of an annual car insurance premium.
The AA's insurance index also indicated that home insurance premiums are falling. In better news for consumers, it said the average quoted premium for a home buildings policy fell by 3.1% to £112.56 in the three months to the end of September. Contents insurance was down 3.4% to £61.64 over the same period. Both types of policy were also down on an annual basis.
Connor added: "While flooding earlier this year made a big impact on headlines, it had no impact on premiums, despite predictions to the contrary. Overall, the weather has been relatively benign for the past couple of years, notwithstanding the February floods.
"As a result, insurers' claims costs have been lower than expected, meaning that business has continued to be profitable and has allowed reserves to be grown. This has translated into lower premiums."
Does exactly what it says on the tin: covers the contents of your home for theft and damage and also may insure certain possessions (jewellery, cycles) outside of the home. Things to watch for include the excess and also the maximum payout on individual items. Another grey area is kitchen fittings, as some contents policies say these are not contents but part of the fabric of the property and covered by buildings insurance and some buildings policies don’t cover them because they regard them as contents.