AA report huge hike in car insurance costs

Figures that have been recently released have shown that there has been a huge rise in the cost of vehicle insurance, and the cost of cover could continue to rise. The research was carried out by the AA and showed that the average cost of car insurance has rocketed by a record 14 percent, and it could rise higher still.

In the three months to September the cost of vehicle insurance is said to have increased by 6 percent for comprehensive cover, and this is the biggest jump recorded by the AA since 1994, since the group started to keep records.

This comes as bad news for the many drivers who are already trying to cope with high petrol costs, high living costs, and financial problems stemming from the ongoing financial crisis and the recession.

Whilst some drivers may have been able to secure a better car as a result of the government’s vehicle scrappage scheme many may now be struggling to get affordable insurance cover on a newer, more expensive vehicle.

An official from the AA stated: ‘Most drivers will be seeing sharp increases when they renew their annual insurance premiums. ‘The index suggests that 89% of insurers have increased their premiums by more than £5 over the past quarter. Only 2.5% reduced them.’ The findings also showed that the cost of comprehensive cover had risen from an average £721 a year ago to £821 now.

The AA said that the cost of car insurance was likely to continue climbing, adding: ‘Car insurers are facing fast rising costs, reserves for paying claims are depleted and investment income has fallen, largely because of the recession. Despite motor insurance being one of the most competitive markets in the UK, insurers have little choice but to put premiums up.’