Cost of insurance soars £105 in year
16:45 22 January 2016
The typical cost of car insurance cover for UK drivers has leapt by more than £100 in the space of a year, an index has found.
An average comprehensive annual policy for someone who shops around across the market cost £625.70 in the final quarter of 2015 – up by £105.64 or 20% compared with the last three months of 2014 – according to the AA’s British Insurance Premium Index.
The typical cost of comprehensive cover increased by £59 or 10% compared with the third quarter of 2015, the AA said.
The 10% quarterly jump is the biggest seen since 2010, it said.
The AA said the rising cost of motor insurance was partly due to a tax hike imposed in November. The standard rate of insurance premium tax (IPT) – paid each time an insurance policy is bought in the UK – increased from 6% to 9.5% from November 1. The change affects 7.3 million car policies.
Michael Lloyd, director of AA Insurance, said that personal injury claims – particularly those for whiplash – were also continuing to “haunt” the industry. It is estimated that false and exaggerated claims add around £50 to every policy.
Research by AA Insurance last year suggested that 11% of drivers thought it was acceptable to make an insurance claim for an injury following a collision, even if no injury was suffered.
Mr Lloyd said: “It’s this acceptance that it’s OK to defraud insurers that has become endemic. It is stealing and it affects the premiums paid by your friends, your family and your colleagues – those that most wouldn’t dream of defrauding.”
He expects premiums to continue to rise this year “but not at the exceptional rate recorded over the last quarter of 2015”.
He added: “And the sooner new legislation to tackle whiplash claims becomes enshrined in law, the sooner that will be reflected in the premiums quoted for car insurance.”