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Car Insurance Premiums Rising Fast

Posted 26th October 2009

Some of the most significant rises were seen for comprehensive insurance which saw a 5.6% increase over the last quarter meaning that the average annual premium now stands at £821 compared to £778 three months ago. These figures do not take into account those insurers who charge extra for customers who prefer to pay monthly and therefore are charged interest on top. Young drivers, however, bore the brunt of the rise in car insurance premiums with third party fire and theft policies increasing by 9.3% which means the average premium now stands at a record £1,059.

What are the reasons given for these rises? According to AA car insurance, there were 15% more claims this year. Claims costs continue to rise at an alarming rate with personal injury claims and associated legal claims costing over £9.6 billion. Even improvements in fraud detection has meant a cost to the tune of £1.9 billion and the rising number of stolen automobile thefts are contributing to the increasing cost of theft claims.

There is no doubt the recession has played its part in these figures as there is a proven correlation with growing unemployment and rising insurance claims. However, the main concern expressed by the AA is the effect this will have on young drivers and the risk this poses to those who will consider driving while uninsured to avoid paying high premiums. In addition, some insurers have withdrawn from selling third party fire and theft altogether meaning there is less competition in the marketplace which is again is helping to push up the price of car insurance premiums.

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