Car insurance premiums have stabilised after a period of sharp increases, but the cost of home cover continues to climb, a report has revealed.
The latest quarterly AA British Insurance Premium Index showed the steepest car cover increases since records began in 1994 appear to be over, as the average annual comprehensive premium fell 0.3 per cent to £921 in the last three months.
At the end of March, average car insurance costs had risen by more than 40 per cent compared with the previous year, but that rate of increase has now dropped to 16 per cent for the 12 months ending September.
The news was not so good in the housing sector, however, as the price of a typical buildings policy jumped to its highest level ever over the three months to the end of September.
Costs for this type of cover have risen steadily since 2009, increasing by 14.3 per cent over the last year, while the average price of a contents policy also rose by 2.2 per cent over the quarter to £77.21.
For combined buildings and contents cover, policyholders can now expect to be quoted an average of £205.55, up 1.5 per cent on the quarter and 5.7 per cent over the year.
Simon Douglas, director of AA Insurance, said the last two years have seen the biggest ever rise in car cover premiums as firms "struggled to close a widening gap between premium income and claims costs".
He added that the disparity had now closed sufficiently to allow insurers to price competitively again, but warned the recent dip "is a respite rather than the start of a trend".
In terms of buildings cover, Mr Douglas continued, two severe winters have caused widespread damage, meaning insurers have to increase their premiums to cover the increased outlay.
The expert suggested that home owners – whether they have insurance or not – should do all they can to minimise the risk of damage to their property from another harsh winter.
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