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Car insurance prices rising are faster than train fares

A new report has suggested that car insurance premiums are going to continue to rise, with some motorists already paying 20% more than 12 months ago.

Recently we wrote about how ministers limiting the amount that can be paid out for whiplash claims, in attempts to reduce the impact that the so called “compensation culture” is having on car insurance premiums. This legislation can’t be introduced soon enough, according to major players in the motor industry, as car insurance premiums are rising at record speeds.

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The AA has released their latest figures, showing that the cost of comprehensive cover has risen by an average of 11.7% to £633 at the end of 2016. This marks the highest price for comprehensive car insurance cover for 4 years. The cost of third party, fire & theft policies has been rising at just under 20% year on year.

According to the organisation, these increases mean that car insurance premiums are rising five times faster than the cost of train fares which seem to be a popular subject in the news recently.

Director of insurance at the AA, Michael Lloyd, claims that these price increases are partly due to Insurance Premium Tax (IPT) increases and partly due to fraud “particularly whiplash claims”.

Another industry expert, insurance partner at KPMG UK David Brown, cited the cost of repairing vehicles damaged in accidents as the main threat to car insurance premium costs. “As of a year ago, insurers were seeing 20% rises in the cost of average repairs for damage to their policyholders’ cars.”

Britain’s one million plus uninsured drivers are another reason that law-abiding drivers are being hit in the pocket when paying for their policy. Even with deterrents in place, the number of road users without cover is continuing to grow. Drivers that are suspected of driving without cover could have their car seized by the police and face hefty fines, they also then need to arrange an impounded car insurance policy to get their vehicle back; often costing more than the policy they should have had initially.

It is estimated that the cost of uninsured drivers and fraudulent whiplash claims are adding approximately £75 to the cost of an average comprehensive policy.