Car premiums reach all-time high

Car insurance premiums have reached their highest ever level, according to the AA’s benchmark British Insurance Premium Index.

The Index shows that over the past quarter, the average quoted premium index for an annual comprehensive car insurance policy rose 2.5 per cent to over £822. This is, for the first time, more than twice the index quoted in July 1994 when the AA Index was first published. Premiums rose by over 6 per cent in 2006, but after falling slightly during the first quarter of 2007 have resumed their upward trend.

The average premium quoted for those who buy third party, fire and theft (TPFT) insurance also rose to its highest ever level, passing the £1,000 mark for the first time.

However, both home buildings and contents insurance premiums fell slightly, cancelling out recent small increases and reflecting the continuing competitive market for home cover. With a fall of nearly 2 per cent, the average quoted premium of under £207 for buildings cover shows little change over the past year. Contents insurance fell by just over 1 per cent to £147.

Car premiums: brakes off again

Over the past 12 months, the average index figure for comprehensive car has risen by nearly 8 per cent, despite a slight fall over the previous quarter. The past quarter saw a 2.5 per cent rise with the Index figure now standing at £822.47.

Non-comprehensive insurance also rose, by 1.32 per cent, to its highest-ever index average of £1,006.44. This kind of cover is typically bought by young and inexperienced drivers with little no-claims bonus and premiums reflect this.

“There is still a large gap between premium income and the cost of claims so I’m not surprised to see the generally upward trend of the previous year resuming. I think this trend is likely to continue,” says Kevin Sinclair, managing director of AA Insurance.

Comprehensive car insurance

Over the second quarter of 2007, the index of average quoted premiums rose by 2.5 per cent to £822.47 (down 0.41 per cent to £802.44 over the previous quarter)

Premiums have risen by 7.84 per cent year-on-year

The Shoparound premium (an average of the lowest three premiums for each risk quoted in the Index) rose by 2.15 per cent to £477.89

Third party, fire and theft insurance

The index of average quoted premiums rose by 1.32 per cent to £1,006.44 (down by 0.62 per cent to £993.28 over previous quarter)

Premiums have risen by 5.48 per cent year-on-year

The Shoparound premium (an average of the lowest three premiums for each risk quoted in the Index) rose by 1.03 per cent to £555.33