Car insurance premiums have seen a surprising fall over the past three months, while home insurance costs have increased for the second consecutive quarter, according to new figures from the AA British Insurance Premium Index
The AA’s car insurance Shoparound index – an average of the cheapest five premiums from directly sold policies for each ‘customer’ in a nationwide basket of risks – suggests that over between July and September 2012, the average quoted cost for an annual comprehensive car insurance policy fell by 2.9% to £844. Over 12 months, however, quotes have still risen by 5.6%.
Car insurance premiums fall by over £600
Using the same Shoparound basket of risks on price comparison sites suggests that the average premium has fallen by 1.0% to £612; a drop over 12 months of 2.3%.
Simon Douglas, director of AA Insurance, says that this is good news for customers although the averages mask wide premium extremes. He added: ‘Competition is tough in the car insurance market, forcing many companies to reduce premiums despite the fact that costs show little sign of abating. Nevertheless, some are still increasing premiums.’
Home insurance prices on the rise
According to the home insurance Shoparound summary, which is an average of the five cheapest quotes for each property in a country-wide basket of risks, the cost of a buildings cover rose 2.4% to £181 over the three months to the end of September (5.2% over 12 months), while contents cover rose 0.8% to £242 (3.3% over 12 months).
The cost of combined cover rose by 1% in the last quarter and 7.2% year-on-year. Simon Douglas at the AA stated that the wet summer, which according to the Association of British Insurers has cost insurers in excess of £400m, is a sharp reminder that the industry must be prepared for more of the same over coming years.
Which? insurance analyst Paul Davies added: ‘The new premium data is a timely reminder that there is still an upward trend in home and car insurance prices over the year from October 2011, despite the drop in comprehensive car insurance premiums over the latest quarter.
‘Shopping around for insurance when your renewal letter arrives, using both comparison sites and directly-sold products, is imperative to get a competitive rate that reflects your risk and doesn’t just represent the insurer ramping up the rate in the second or third year of having your business.’