Car premiums continue to accelerate

Car insurance premiums have been steadily rising since April 2006 with average quoted premiums for both comprehensive and TPFT at their highest ever level, according to the AA British Insurance Premium Index.

“The main driver is personal injury claims which are rising at around 10 per cent per year1. The cost of repairing accident damage is also increasing at about 5 per cent per year, as modern cars are built with greater crumple zones, expensive secondary safety systems (such as airbags), incorporate ‘exotic’ lightweight materials and thus cost more to repair. The irony of this is that you are much less likely to be killed in a serious accident – and are thus more likely to make a personal injury claim, the cost of which will ultimately find its way to car insurance premiums,” John Close says.

Accidents with uninsured drivers fell by 5.8 per cent last year thanks to the efforts of the Motor Insurers’ Bureau (MIB) and police use of automatic number plate recognition (ANPR) equipment to identify uninsured vehicles.

“The cost of claims against uninsured drivers comes from the MIB, to the tune of about £30 per policy bought by honest drivers. Over the past two years, over 200,000 uninsured vehicles2 were confiscated and if this success continues it should help to reduce one of the factors that lead to increasing premiums,” he adds.

Car insurance at a glance

Average comprehensive car insurance premiums rose 2.4% to £629.04 (£614.54 in previous quarter). The Shoparound premium rose 3.9% from £400.11 to £415.69.

Average TPFT car insurance premiums rose 1.5% to £628.60 (£619.05 in previous quarter). The Shoparound premium rose 2.2% to £398.40, from £389.88.