Car and home insurance premiums add to Brits money woes

17 July 2008 / by Rebecca Sargent
Insurance premiums are resuming their upward trend in line, with rising inflation, AA's quarterly British Insurance Premium Index has found.

The news comes amidst further price hikes for Brits as the price of oil has soared over the past few months, pushing the cost of fuel in all its forms through the roof. According to the index, car insurance premiums had been enjoying a rest period over the previous quarter. However, it seems they have now continued to rise steadily, just as Brits are facing increased car tax and other running costs.

The research shows that over the past three months, to the end of June, more than £20 has been added on to the average comprehensive car insurance quote, which now stands at more than £700.

Young drivers are expected to take the brunt of the increases as it is they who are statistically most likely to claim when they only have third party, fire and theft insurance. Since the last quarter, an increase of £45 has been added to the average young driver's insurance premium an increase that exceeds the current inflation rate of 3.8 per cent.

Simon Douglas, director of AA Insurance, said: "Car insurance costs are spiraling. While the number of casualties on Britain's roads is falling, the cost of accidents is rising and young drivers are taking an increasing share of the toll.

"Insurers are also concerned about rising legal costs and personal injury claims and I expect the upward trend in premiums to continue."

Meanwhile, the Index also showed that home insurance
The index showed a 22 per cent annual rise in the Shoparound index (an average of the lowest three premiums for each risk quoted in the Index) for buildings insurance cover,

Mr Douglas said: "I believe that the sharp rise over the past year indicated by the Shoparound index for buildings cover suggests that those insurers offering the lowest premiums have revised their rates to take account of predictions of more flash flooding events."

Mr Douglas added that home insurance premiums are likely to continue to rise, he said: "I welcome the announcement from the Government and the ABI that the Government is promising long-term flood defence investment, which means that the insurance industry will continue to cover families at risk. However, I believe that for many people, home insurance premiums will continue their upward trend."

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