Car insurance premiums rocket - with more increases to come

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The cost of a comprehensive car insurance premium has risen by 12.9% in the last year, with motorists set to face further increases this year.

The AA says in the last 12 months the price of a typical annual comprehensive car insurance policy rose by £73.42 and now stands at £640.82.

In the same period, quotes for third party, fire and theft cover grew by 21.6% - with the average policy now costing £774.37 a year.

 

The breakdown cover provider says motorists should expect further increases during the rest of 2017. This is thanks to recent government changes to the Ogden rate – which determines how much insurers must pay out for the most severe claims.

These new rules took effect in March and will see claimants who take a lump-sum payment given more cash than they previously would have been. Insurance analyst, Consumer Intelligence, estimates that motorists will see their car insurance premiums rise by up to £100 per year because of the changes.

Michael Lloyd, AA director of insurance, says: “It [the Ogden rate] has had an immediate effect on car insurance premiums because injuries already claimed for, but not yet paid, are affected by the rate change as well as new claims.

“It was an astonishing and unrealistic decision [by the government] that didn’t take account of where claimants are most likely to save their money.”

Published: 03 May 2017
Last updated: 03 May 2017

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