Car insurance has become the latest in a long line of financial products subjected to price hikes as the UK navigates its way through the credit crunch. According to the latest Sainsbury's Car Insurance Index, premiums now stand at 5.8 per cent higher than this time last year.
In fact, car insurance premiums have risen so much that the average premium has exceeded £500 for the first time since the Sainsbury's index was launched in 2005.
According to the study, age has made significant differences to premium increases in the past twelve months. Motorists aged 65 and older saw an average rise of 10 per cent, whereas those aged 25 or under continue to pay the most for their car insurance, despite an increase of just 2.47 per cent.
Manager of Sainsbury's Car Insurance, Joanne Mallon, said: "Given that car insurance
premiums are rising and the cost of driving is now at its highest for a number of years, it is all the more important for motorists to shop around for competitive insurance.
"However, accepting a lower premium does not mean that you have to sacrifice quality cover – by shopping around you can find both. Just make sure, when comparing car insurance
policies, that you do this on a like-for-like basis."
According to the study, men are still paying higher premiums on average than women at £540.49, compared to £470.47. "There are a number of factors leading to higher premiums, including a rise in the cost of personal injury claims and also repairs." Ms Mallon added.
Moneysupermarket.com warns that adequate car insurance cover should be taken into consideration this August bank holiday. Its research found that more than a third of drivers are unaware their motor insurance may be automatically downgraded from fully comprehensive to third party when driving in the rest of Europe.
Peter Gerrard, head of insurance research at moneysupermarket.com, said: "If you normally have comprehensive car insurance, it will come as a shock if you are with one of those insurers who will downgrade your cover if driving in Europe. With third party only any damage to the car will leave you to foot the bill should you have an accident."
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