AA: Car insurance premiums up again

Insurance provider AA has published its latest British insurance premium index, claiming that the cost of car insurance has increased for the second quarter in succession.

Average quoted premiums for comprehensive motor insurance rose by 1.24 per cent in the third quarter of 2006, reaching an average of £772.13. The highest level that premiums have reached for this form of cover was £777.57 in the fourth quarter of 2003.

Third party, fire and theft, which AA claims is mostly purchased by younger drivers, jumped by 4.62 per cent in cost, charging an average of £998.21.

Premiums for this cover have increased by 21 per cent over the past two years and have more than doubled since the AA index began in 1994.

Kevin Sinclair, managing director of AA Insurance, described the increase in premiums as "long overdue".

"It has long been clear that the increasing cost of meeting both accident damage and personal injury claims would eventually have to be absorbed by increased premiums," Mr Sinclair commented.

The company’s index did not bring universally bad news for insurance customers, as it found that most premiums for home cover were on a downward trend in the last quarter.

The average quoted premium for buildings cover stood at £206.42, a 0.33 per cent reduction, and premiums for contents cover decreased by 2.61 per cent to hit an average level of £148.10.