Average cost of UK car insurance jumps over £100 in a year

Whiplash injury insurance claims
22 Jan, 2016 10:41am Martin Saarinen

The cost of a fully comprehensive car insurance policy has gone up by £105.64 in the space of a year, AA Insurance says

Car insurance buyers are paying on average £100 more for the same policy today than they were a year ago, new figures from AA Insurance reveal.

The breakdown and insurance provider analysed the average cost of a fully comprehensive car insurance policy during the last quarter of 2015, and found that even those who shop around will pay on average £625.70 – up by £105.64 when compared with the last three months of 2014. 

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The 20 per cent price rise in premiums is partly explained by the insurance tax hike levied by the Government. The Insurance Premium Tax (IPT) was raised from 6 to 9.5 per cent on 1 November 2015, meaning insurance buyers now pay three-and-a-half per cent higher tax on each policy.

Insurance fraud drives up premiums

Another explanation for the rise in insurance premiums is the continuing presence of insurance scams in the UK. The latest figures from the Insurance Fraud Bureau estimate Crash for Cash schemes alone cost vehicle insurers £336 million a year - figures eventually passed down to honest consumers.

Whiplash injuries are said to add another £90 to every insurance policy, and research by AA Insurance shows that 11 per cent of drivers thought it was acceptable to make a claim for an injury following a collision, even if no harm was suffered.

To combat insurance fraud, the UK Government set up the Insurance Task Force in January 2015. The Government recently welcomed a number of proposals the organisation put forward, including things like sharing of insurance data amongst insurers and introducing more laws to curb scams. 

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Michael Lloyd, director of AA Insurance said: “It's this acceptance that it's OK to defraud insurers that has become endemic. It is stealing and it affects the premiums paid by your friends, your family and your colleagues - those that most wouldn't dream of defrauding.

“And the sooner new legislation to tackle whiplash claims becomes enshrined in law, the sooner that will be reflected in the premium quotes for car insurance.” 

What are your thoughts on rising insurance premiums as a result of fraud and taxes? Is this acceptable? Tell us in the comments below...