Insurance premiums hit all-time high

Click to follow
The Independent Online

Home and car insurance premiums have hit an all-time high following last year's floods and a rise in personal injury litigation, the AA warned yesterday.

The motoring organisation's British insurance premium index showed a 1.4 per cent rise in the average quoted premium for home buildings insurance over the last quarter of 2007. The typical annual policy now costs £218.60, the highest level since the index was set up 13 years ago.

Car insurance premiums, which have been rising steadily since April 2006, also touched a new high. Average rates for a comprehensive policy rose 2.4 per cent, to £629.04 a year.

Home contents premiums rose by 0.4 per cent in the same period, to an average of £150.57 for an annual policy.

The AA said that while the cost of home buildings insurance was up, premiums had not climbed by as much as many in the industry expected in the aftermath of last summer's floods.

"The average cost of [claims related to the floods] is approaching £52,000," said John Close, insurer relations director at the AA, "but I'm surprised that premiums have risen so little over the past quarter."

In the case of car insurance premiums, Mr Close said that personal injury claims, which have been increasing at a rate of almost 10 per cent every year, were the main drivers of inflation. An increase in the cost of parts for damaged cars has also raised costs.