Car and home cover is getting cheaper

 

Simon Read
Friday 26 July 2013 20:15 BST
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Car cover is down as measures to stop fraud claims take effect
Car cover is down as measures to stop fraud claims take effect (Getty Images)

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The cost of a year's car insurance has plummeted by a record 3 per cent over the past three months to £594.86. That's the lowest annual premium since January 2011.

There's also good news for homeowners in the latest AA Insurance Index published today – buildings cover fell 2.6 per cent over the quarter to £130.45 while a typical contents policy fell by 2.1 per cent to £70.72. The average combined buildings and contents policy fell 2.5 per cent to £175.78.

What's going on? Why is insurance getting cheaper? Car cover is down as measures to combat fraud and spurious whiplash injury claims take effect, according to Simon Douglas, director of AA Insurance.

"The news that hundreds of rogue 'no-win no-fee' claims firms have been reined in is welcome and, in part, falling insurance premiums reflect that," he said.

"I hope that Britain's shameful reputation as being the 'whiplash claim capital of Europe' will now be put behind us."

But he warned that home cover could yet rise again following the recent landmark agreement between the Government and the insurance industry on insuring flood-prone homes. The move could add £10 to the typical policy.

"Claims will be met from insurers and from a 'flood reinsurance pool', which has yet to be funded. The Government is unlikely to underwrite the scheme [as happens in other European countries] so it seems likely that a levy of around £10 could be added to every home insurance policy."

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