Car Insurance Quotes Rise 15%

Last year, the cost of car insurance soared, bringing average premiums up 15.3% from £842.69 to £971.40 a year. The Automobile Association (AA) has revealed that prices rose 5.4% in just the last three months of 2011. Young motorists are still seeing prices rising astronomically, with the average driver under the age of 22 paying £2,497 for car cover – a 10.91% rise for the year.

Male motorists in the under 22 age range pay the most at an average quote of £3,163, compared to the average female driver in the same category paying £1,799. Among male drivers between the ages of 30 and 39, however, the average cost of car insurance has risen the most, at 19.19% to £819. Meanwhile, female motorists between the ages of 60 and 69 are quoted to pay the least at £424. On a regional basis, insurance premiums are the highest in London and the North West, while the cheapest are in Scotland.

AA Insurance director Simon Douglas is shocked about how high insurance costs have risen. He expected much smaller increases, particularly after the small decline in premiums during the third quarter of last year. This shows that cheaper deals are disappearing, and young motorists appear to be losing out the most. It’s clear that young drivers are still a concern to insurers, as many don’t offer cover for those under the age of 21 anymore. Young women will see the largest increases in premiums, while insurers will be careful to prevent substantial losses that they will have difficultly absorbing.

Last year, the European Court of Justice ruled that insurers couldn’t use gender as a factor in the cost of insurance premiums, with the practice being deemed discriminatory. However, the ruling won’t be enforced until the last month of this year. The ruling means that everyone who purchased a car insurance policy since the end of December will be affected by the decision when their cover is renewed.

The gender ruling has also opened a path for more widespread use of the “black box” or telematic insurance, which bases premiums on driving performance. Douglas said that the devices put the driver in control of responsible and safe driving, regardless of if they are male or female.

This report follows one from the House of Commons transport select committee last week, revealing that the latest rise in car insurance costs was due to an increase in whiplash injury claims. The AA believes that more sharp rises are unlikely but expects prices to continue increasing above inflation for the rest of the year. Douglas says reforming how personal injury claims are managed needs to come soon. It’s wrong how the claims are increasing while the number of road accidents are declining, he added.