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Drivers to experience rise with insurance renewals for 2010

Drivers look set for a unwanted surprise when they renew their car insurance this year, after premiums recorded their biggest ever increase during the last three months of 2009.

According to the latest AA British Insurance Premium Index published last month, the average insurance quote for a renewal rose by 11% between September and December.

Overall, the average quoted comprehensive premium rose by 7.2%, sending it through the £1,000 a year barrier for the first time.

The cost of third party, fire and theft policies, typically bought by young and newly-qualified drivers, rose by a third over the year, pricing many young drivers out of reach.

The AA's findings underline the importance of shopping around when you get your annual renewal notice. The disparity between the average quoted premium and the cheapest prices paid by those looking for the best deal has risen to £387 a year for comprehensive cover.

The increases were influenced through the rise in claims last year, with insurers paying out 20% more in claims than they had been collecting in premiums. With thick snow and icy conditions during the later part of last year, likelihood of accidents increased and proved more frequent.

The AA's research shows the price rises are not evenly spread across the UK. The largest were in East Anglia, where motorists paid an average of 9.6% more in the last quarter of last year, while Wales saw the smallest increase at 5.7%.

Meanwhile, insurers have also seen fraud levels jump, adding £44 to every household's insurance cost. It is also estimated that uninsured drivers represent around one in 20 vehicles on Britain's roads, and claims involving such drivers added around £30 to every annual motor policy.

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