Premiums for both car and home insurance have once again risen, the latest findings from the AA British Insurance Premium Index show.

Over the past quarter, average quoted premiums for home buildings insurance rose by 1.4% (to an average of £218.60 for an annual policy). This follows a rise of 3.0% over the previous quarter; the largest single increase since the Index began in 1994. However, home contents premiums rose by just 0.4% to £150.57. The aforementioned increases reflect the £750 million domestic property claims following last summer’s floods.

Car insurance premiums also rose - comprehensive by 2.4% and third-party, fire and theft (TPFT) cover by 1.4%. Buyers can now expect to be quoted on average £629.04 for an annual comprehensive policy and £628.60 for TPFT.

The AA Index averages premiums from up to 85 motor and 37 home insurance companies and schemes, based on a basket of 1,000 car and 750 home risks.

John Close, insurer relations director at the AA notes that buildings insurance premiums are at their highest since the Index began though professes surprise that premiums have risen so little over the past quarter. Close goes on to say that he hopes that the Government’s Climate Change Bill includes robust provisions to ensure that new buildings are more flood and storm resilient, particularly after the renewed flood threats of the past few days. Local authorities must also think through where new housing is built, as it will help no-one if families find their homes are uninsurable because of where they are located.

Meanwhile, car insurance premiums have been steadily rising since April 2006 with average quoted premiums for both comprehensive and TPFT at their highest ever level.

“The main driver is personal injury claims which are rising at around 10% per year. Also, the cost of repairing accident damage is increasing at about 5% per year, as modern cars are built with greater crumple zones, expensive secondary safety systems (such as airbags), incorporate exotic lightweight materials and thus cost more to repair.

“The irony of this is that you are much less likely to be killed in a serious accident and are thus more likely to make a personal injury claim, the cost of which will ultimately find its way to car insurance premiums,” Close observes.

Accidents with uninsured drivers fell by 5.8% last year thanks to the efforts of the Motor Insurers Bureau (MIB) and police use of automatic number plate recognition (ANPR) equipment to identify uninsured vehicles.

“The cost of claims against uninsured drivers comes from the MIB, to the tune of about £30 per policy bought by honest drivers. Over the past two years, over 200,000 uninsured vehicles were confiscated and if this success continues it should help to reduce one of the factors that lead to increasing premiums,” Close adds.

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