Car and home premiums still falling, says AA

Car and home insurance premiums fell in the first quarter of 2013, according to the latest research by the AA British Insurance Premium Index.

The average quoted motor premium for the period was £746.75, a drop of 1.4% since Q4 2012. Over the past year, premiums have fallen 4.1%. 

AA Insurance director Simon Douglas said that consumers would welcome the trend.

The AA also found that premiums for home buildings, contents and combined policies also fell over the first three months of 2013.

The research found that buildings insurance was down 2.6% over the quarter, and down 1.7% over the past 12 months. The AA found that the price of contents cover fell 1.7% in Q1 2013, and dropped 2.4% over the past year. The firm also discovered that the cost of a combined buildings and contents policy fell 1.8% during the first quarter of this year, and fell 1.4% over the past 12 months.

Douglas said the downward trend were hiding wide regional variations, particularly where homes were flooded. 

He said: “Flood-affected homes will have seen big premium increases, especially if they have suffered two or three flood claims.” 

He added that the end of the Statement of Principles on flood insurance in June left about 200,000 homes at risk of flooding, and more than one million at risk generally.

He said: “Homeowners will be exasperated and worried at this impasse. People need flood affordable cover and, at present, we are on the brink of an open market that could see insurance becoming out of reach for flood-affected families with obvious consequences for property values and mortgageability.

“Although the industry has come up with different proposals, the government is reluctant to underwrite them and that will be vital if there is a major flood catastrophe soon after an agreement is reached.

“I see no option but to extend the Statement of Principles for the time being but it’s not a satisfactory way forward – it was only ever seen as a temporary measure.”

Douglas added that home premiums could rise again if insurers become nervous about the increasing frequency and severity of extreme weather.