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Car and home insurance prices on the rise

Young drivers hit hardest by price hikes

price rise

Car and home insurance prices are beginning to rise, according to the AA’s latest British Insurance Premium Index.

Over the last 12 months to 30 June 2016, the typical shoparound quote has risen by nearly £84 from £484.86.

Michael Lloyd, director of insurance at the AA, commented: “Premiums have not risen by as much over the second quarter as some commentators predicted although it’s still an upward trend that I expect to continue over the rest of the year.”

Prices could rise further later in the year as the rate of Insurance Premium Tax (IPT) increases from 9.5% to 10% in November, although this is likely to have less of an impact than last year’s much larger hike from 6% to 9.5%.

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Young drivers hit hardest

Young drivers aged between 17 and 22, who typically pay more for insurance cover, have seen the biggest jump in prices this quarter. Premiums for this age group increased by 3.5%, pushing the cost of a typical policy up by £42 to £1,240.50.

The smallest increase was for those over the age of 70, with an increase of 1.2% to an average policy price of £452. However, drivers in this age group pay £103 more on average than those in their 60s, and can expect their premiums to increase further as they age.

Lloyd said: “Young drivers account for the largest number of crashes involving death and serious injury and their premiums recognise that. Premiums for drivers aged over 70 begin to rise and increase sharply as drivers reach their 80s and 90s yet the number of claims for this age group remains significantly lower than for drivers in their teens and 20s.”

Home insurance prices also increase

The AA report also found that home insurance prices have risen for the third consecutive quarter.

The cost of combined home insurance (buildings and contents) has increased by more than 4% in the last 12 months, to an average of £158.48.

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