Car insurance costs rise by 40%

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  • | by Kristian Dando

Britain’s ‘compensation culture’, bogus claims and uninsured drivers have been blamed for a record rise in the cost of an annual car insurance policy in the AA’s British Insurance Premium Index.

The insurer has found that the average cost of a 12 month car insurance policy in Britain is now £892, a 40 per cent rise on March 2010.

Simon Douglas, director of AA Insurance, said: “more people are withholding information when taking out a policy or exaggerating personal injury claims to try to reduce their costs. But this simply piles on costs for insurers and results in yet higher premiums for honest motorists.” Although the number of collisions on Britain's roads is falling, the number of claims for whiplash injury is rising. “It's tempting to make such claims with the huge number of ‘accident management' law firms using cold-call marketing techniques,” said Douglas.

The Association of British Insurers claims that for every £1 paid in compensation, a further 87p is paid in legal costs. Every day over 200 such claims are made, often for accidents that happened up to three years previously, for which no mention of personal injury was made at the time.