Car insurance costs rise but home insurance holds
Monday, 20 Oct 2008 17:30
Car insurance premiums rise
Average annual comprehensive car insurance rose 7.6 per cent – or £50 – over the last year to £724.28.
Meanwhile the average buildings insurance policy was up 3.6 per cent in and last year and the average contents policy was down 2.8 per cent – to £205.98 and £126.75 respectively.
The average combined home and contents policy stood at £293.70 – down 1.9 per cent on three months ago.
Data from the AA also show the average best buy car insurance policy was up 8.7 per cent, while the best buy combined home and buildings policies on the market fell by 3.6 per cent.
Simon Douglas, director of AA Insurance, explained that while car insurance premiums were rising, the industry was still making a loss.
"For every £100 taken in premiums, more than £105 is paid in claims. Insurers are particularly concerned about increasing legal costs and personal injury claims which last year rose by 22 per cent," he said.
Mr Douglas also pointed out buildings insurance policies are now just 6.9 per cent higher than in 1994 and contents insurance cover is only two per cent higher than 14 years ago.
"I expected both buildings and contents cover to continue their upward trend so I am a little surprised that the Index is showing these falls," he said.
"However, home insurance has become an extremely competitive market with some compelling offers over the past quarter and the quoted premiums reflect that.
"We have also seen some insurers looking carefully at which risks they are willing to cover or are asking customers to refer for a bespoke quote, particularly those in areas where claims for flooding or theft are most likely and premiums would therefore be high. At the same time, we're seeing premiums reducing for safer risks and this has had an effect on the Index result."