According to the latest car insurance rate index published by the AA, the average premium price for annual car cover has risen by more than 40 per cent over the past year.
TheAA British Insurance Premium Index found that it now costs £892 a year on average to secure comprehensive motor car insurance. Since the Index began tracking the rise and fall of discount car insurance in 1994, this has been the largest annual increase ever recorded by the AA.
It wasn’t just comprehensive cover that rose over the past year, however. Third party, fire, and theft policy prices increased by an eye-watering 82 per cent, the Index found, topping out to an average £1,532 annual payment.
However the AA says that these highly inflated rates is reflective of the fact that younger motorists are the typical third party cover holders. In actuality there are several car insurance companies that no longer offer the policy to their customers.
The reason behind these rocketing premiums? A rampant increase in injury claims and fraud, experts say, while competitive, relatively underpriced cover has also played a contributing role. AA spokesperson, Simon Douglas, remarked that more and more motorists are choosing to withhold information when they take out a policy – or decided to exaggerate personal injury claims to reduce their own costs.
When motorists do this, however, this simply makes matters worse for insurance companies. As a result honest motorists see the costs passed down to them in the form of increased premium prices.
Mr Douglas added that car insurance companies are still not in the black even with the sharp premium increase. Insurers have been making payments of £1.20 on every £1 they collect in premiums, one estimate suggests, caused by newer providers entering the car insurance industry with an eye to building a large customer base swiftly.