Rise in car insurance premiums

With the average car insurance policy costing an extra £210 over the last year, motorists are having to shell out for far higher premiums, the AA has said.

The AA's British Insurance Premium Index revealed that the average fully comprehensive policy went up by a third to £843 over the last year.

In the last three months of 2010, motorists were severely hit by a price rise of 6.4% - £51 - in policies, coupled with the impending fuel duty and VAT hikes, and the 1% rise in Insurance Premium Tax.

Fully comprehensive premiums for young drivers between the age of 17 to 22 rose by more than 58% year-on-year to £2,251. Young drivers were further hit by an increase of around 70% to £1,390 in the commonly secured third party, fire and theft policies.

Simon Douglas, director of AA Insurance, said: "There has been no let-up in premium increases as insurers struggle against losses from 2009, when for every £100 taken in premiums, £123 was being paid out in claims.

"This has led to the biggest annual premium increases we have seen since the AA Index began in 1994."

The AA index also found home insurance had risen by £10 over the last quarter to £143 while premiums for contents cover fell to £72.

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