Home insurance premiums also drop
The average price of car insurance has fallen by 9.8% over the last year, taking premiums to their lowest levels since January 2011 according to research from the AA.
The AA’s British Insurance Premium Index revealed the average cost of car insurance was £594.86, a fall of 3% on the previous quarter.
Director of AA Insurance Simon Douglas said: “This fall, the biggest the AA’s Index has recorded since it started in 1994, is the sixth successive quarterly drop in premiums. It will be welcome news for hard-pressed motorists facing sharp fuel price increases.”
However, the index also revealed that not everyone benefitted from price drops, with young female drivers facing a small increase.
Douglas said: “The background of falling premiums has helped insurers to more effectively manage the premium gap between men and women, although young drivers have fared least well. Some new and young women drivers will have seen a small premium increase, even after taking their no-claim discount into account.”
Home Insurance
The AA’s research also looks at the cost of home insurance, where the average price has fallen 5% over the last year to £130.45.
Douglas said that the selection of Flood Re would help keep premiums affordable: “While the details have yet to be thrashed out, I understand that the Flood Re agreement will see premiums for homes in flood-prone areas capped in line with council tax bands, making them affordable.
“I do see this as very welcome news although primary legislation will be needed, as well as EU approval before the agreement takes effect, which will take time.”
However, Douglas did have one warning for insurers about the agreement.
“If there is a major flood disaster soon after the agreement is finalised that will lead to a sharp rise in home premiums, as happened after the 2007 disaster,” he said.
The Shoparound index is an average of the five cheapest quotes for each in a nationwide basket of ‘customers’, from insurance companies, brokers and price comparison sites.
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