Cost of car insurance rises sharply

23/10/2009

The AA says that car insurance premiums are 14 per cent higher than they were a year ago.

The price hike is putting a heavier burden on the household finances UK motorists who are already stretched.

New figures from AA Insurance show that the average quoted deal has risen by 5.6 per cent over the last three months - the sharpest increase recorded since 1994.

Commenting on the figures, AA Insurance director Simon Douglas said that premiums could rise higher in future as firms struggle to return to profitability.

Insurers are currently thought to be paying £110 out in claims for every £100 taken in premiums.

Kevin Still, Director of debt management company EuroDebt says "It seems policy holders are footing the bill of rising personal injury claims, fraud, theft and uninsured drivers.

The news on third party fire and theft policies is not much better, with many insurers withdrawing this type of cover".

He goes on to say that "EuroDebt would always look at properly budgeting for car expenditure in a Debt Management Plan'>Debt Management Plan, especially if the vehicle is required for work and to sustain household income".

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