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Wednesday, July 25, 2012

Why Average Cost of car insurance hits

Average Cost of car insurance hits : The average cost of car insurance has reached £1,000 for the first time. An epidemic of bogus whiplash and ‘cash for crash’ claims has helped push the typical premium to £1,034.

Drivers are paying 8.5 per cent more than a year ago and twice what they paid in July 2008, according to the AA. Four years ago, the average fully comprehensive policy cost £509.

Ian Crowder, a spokesman for the AA, said: ‘Premiums have more than doubled in just four years which is truly astonishing.

‘A lot of this is down to the soaring number of often highly dubious whiplash cases and the growing number of cash for crash claims.’

The report says young male drivers are taking the brunt of the rises. Premiums for men aged 17 to 22 now average £2,792.

MPs on the Commons transport select committee have already warned of a £2billion a year ‘whiplash epidemic’ they say adds up to £90 to every policy. And in May the Office of Fair Trading announced that insurance firms are to be investigated over a racket that inflates premiums.

It said there was a merry-go-round of referral payments, excessively high repair bills and unnecessarily steep replacement car-hire charges. The abuses add an average of £560 to the cost of replacement vehicles and put £155 on repair bills.

Many motorists will pay more than £1,034 because the AA’s figures are based on the average of the cheapest five policies that can be bought direct from an insurer.

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