Spring sale for car insurance: buy now while stocks last

February and March will see the ‘sale of the year' for car insurance as well as the ‘sale of the century' for new and used cars, according to AA Insurance.

The March registration change traditionally marks the annual peak for car sales but given the difficulties being faced by the motor industry, forecourts will be discounting heavily in what AA President Edmund King recently described as: "the sale of the century: there's never been a better time to buy a car.

Simon Douglas, director of AA Car Insurance says: "Not only will retailers be pinning their hopes on signs of a recovery in car sales, this time of year also sees any underlying increases in car insurance premiums put on hold, or even reducing."

Preliminary figures for the AA's benchmark British Insurance Premium Index suggest that, for the third successive year, average quoted premiums for comprehensive cover are unlikely to show much movement during the first quarter of 2009. The unadjusted figures for January and February suggest that the average quoted premium, which is a robust indicator of insurance premium trends, has remained static.

"There's more new business and renewals during the first quarter than at any other time of year so insurers tend to discount premiums in order to gain market share," Simon Douglas explains. "There is therefore intense competition between insurance providers which keeps premiums in check."

However, Simon Douglas doesn't believe the stall in premiums will last. "Despite the temporary levelling off of premiums I fully expect them to resume the accelerating upward trend after March, or even earlier. With insurers coming under pressure from rapidly rising costs and falling reserves, there could well be increases possibly in excess of 10 per cent this year." He points out that during 2008 premiums rose by 8.7 per cent and 2007 by 5.9 per cent, despite there being little or no movement during the first quarter of either year.