AA Index: Car premiums stay low, home insurance up

11 April 2006 / by None
Comprehensive car insurance premiums have remained steady over the past quarter with no noticeable rises, despite home insurance costs being on an upward trend recently, according to the AA British Insurance Premium Index.

The average premium for fully comprehensive car cover fell by 0.5 per cent, while third party, fire and theft (TPFT) insurance represented the largest rise of all the values traced by the index for the fifth quarter in a row (1.75 per cent).

Home contents insurance also rose for the fourth successive quarter, this time by one per cent, with home buildings cover also showing an upward trend - up 0.64 per cent.

According to Kevin Sinclair, the managing director of AA Insurance, the related car insurance premiums of full and TPFT cover showing markedly different trends, stemming from the different car owners who take out the insurance and the different risks they present for claims.

"Younger people already pay much higher premiums because of their inexperience, leading to more frequent claims," he explained.

"In addition, they (insurance companies) face theft claims that are more likely to come from owners of older cars, which are often parked on the street and don't benefit from the security features of modern models."

However Mr Sinclair did note that accident damage claims and personal injury claims through car insurance were on the increase and although the latest figures display a downward trend, he believes the current premiums may be "unsustainable".

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