Car and home insurance premiums jump sharply

New figures show that premiums for both car and home insurance increased in price over 2011...

Car insurance premiums rose by more than 15% over 2011, according to the AA. The average Shoparound price for a policy is now £971.40.

The AA reached this 'Shoparound' figure by taking an average of the three cheapest quotes from insurers, brokers and schemes for a range of customer types.

Prices also climbed across the fourth quarter of 2011, with premiums up 5.4% over the three months ending 31 December. That’s despite a brief mid-year stall.

The main index – an average of every quote for each customer in the AA’s collection of risks – rose by just 0.6%. So while overall price rises are fairly moderate, the cheapest deals are still disappearing.

Key reasons cited for the increase were insurer concerns over young drivers and a sharp increase in personal injury claims for whiplash – an issue cited by MPs as a major problem earlier this month.

Regional winners and losers

Scotland remains the cheapest part of the UK to insure a car with a Shoparound annual premium of £587 and a main, full market price of £998. The West is the next cheapest with a Shoparound price of £748 (full market £1,203), followed by Anglia at £769 (full market £1,212)

Premiums are the most costly in the North West. This region has a best-buy Shoparound price of £1,615 – almost three times the level in Scotland, while the main index price is a massive £2,063. London is the next costly with a Shoparound price of £1,120 and full market price of £1,628.

London saw the biggest Shoparound premium increase over the final quarter of 2011 with a 5.9% rise, followed by Scotland (5.7%). The smallest rises were in the West (3.3%) and North East (4.0%).

Home insurance

Premiums for home insurance also continued to climb over 2011. The AA’s Shoparound index – which again looks at the three cheapest quotes from a variety of insurers – shows that the average quote for annual buildings, contents and combined cover rose 11% over 2011.

The steepest rise across the year was in the price of contents insurance. Annual premiums jumped by 11.2%, rising from £72.43 to £80.58. Buildings premiums rose by 9.5% across year while combined policies increased by 5.6%.

The AA blamed the price rises on an increase in storm damage, flooding and theft levels and said the rising figures reflected both past losses and concern about future claims. It also predicted that the price of home insurance would continue to rise over 2012 resulting in a premium uplift of 5-10% by this time next year.

Save on your cover

Read 25 ways to cut your car insurance and 25 ways to cut your home insurance for some top tips on shaving pounds off your premiums.

More: This blunder could void your car insurance | Your car insurance isn’t as comprehensive as you think