Car insurance premiums 'rise by 11%'

31/07/2009

The cost of insuring a car is on the rise, new industry figures have confirmed.

According to the AA, overall costs are up 11 per cent on last year - an increase way ahead of inflation.

This means that many more of Britain's 30 million-plus drivers will struggle to pay their premiums, especially in the current recession conditions.

The AA also found that fraudulent claims from drivers had been a prime factor in driving up customer costs.

Uninsured drivers are also thought to add £30 million to the average annual bill.

"If you are already finding it difficult to make ends meet then any rise in essential household expenditure is likely to be painful," Kevin Still, director of EuroDebt, said.

"The cost of running one or two vehicles has risen quite markedly in recent times, with rises in both insurance premiums and fuel costs. There is a temptation perhaps to drop the level of insurance cover - which may be a false economy. It is frustrating for the majority of responsible drivers that they have to foot the bill for fraud and uninsured drivers.

"For those people on a Debt Management Plan or an IVA then these types of cost increase above inflation need to be factored into the household budget during the annual review process. The revised levels of allowable expenditure for people in financial difficulty dealing with a licensed debt advisor are being announced in August. These need to routinely take account of some of the most volatile essential expenditure items, like energy costs and insurance premiums."

Tags; Budgeting Advice, Young Family Finances, Recent Graduate Debt,

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