Home insurance: Premiums heating up
Car and home insurance costs rising
Thursday, 17 Jan 2008 13:17
Home and car insurance premiums are rising, according to new market research.
The AA Index shows buildings insurance premiums were up 1.4 per cent – to an average of £218.60 for an average policy – over the last three months of 2008, following a three per cent rise in the previous quarter.
Contents insurance costs rose 0.4 per cent to £150.57.
AA attributes the rises to the £750 million worth of property claims after this summer's floods.
Despite the rises, the AA's Shoparound index – looking at the lowest quotes for each risk – fell 1.1 per cent to £144.07.
Car insurance premiums have also continued to grow – rising steadily since April 2006.
Average comprehensive car insurance rose 2.4 per cent to £629.04, while third party fire and theft policies were up 1.5 per cent to £628.60. The Shoparound prices for both policies stood at around £400.
"The main driver is personal injury claims which are rising at around ten per cent per year," said John Close, AA insurer relations director.
"The cost of repairing accident damage is also increasing at about five per cent per year, as modern cars are built with greater crumple zones, expensive secondary safety systems (such as airbags), incorporate 'exotic' lightweight materials and thus cost more to repair.
"The irony of this is you are much less likely to be killed in a serious accident – and are thus more likely to make a personal injury claim, the cost of which will ultimately find its way to car insurance premiums."
However, accidents with uninsured drivers – which adds £30 a year to policies – fell 5.8 per cent last year, helping to stop still greater premium rises.