Car insurance cost rises by 31%

The cost of driving is steadily on the up due to a 31% increase in the cost of insurance for a fully comprehensive policy.

Motorists have seen their insurance rise, along with ever-soaring petrol prices, because of the cost of accidents involving uninsured drivers and rising fraud.

Insurers are raising their prices in a desperate bid to return to profitability.

According to Confused.com, the average cost of a policy rose by 14.2% during the three months until the end of June - which is a £74 increase.

This latest rise leaves a fully comprehensive policy costing 31% more than it did just one year ago.

The double digit increases are in response to the £400m the industry had to pay out to the Motor Insurance Bureau last year to cover to cost of accidents involving uninsured drivers.

This alone added £30 on average to the price of policies for motorists.

Other reasons for the increase have been stated as being 'increased claims cost' and 'rising fraud'.

Simon Lamble, product director at Confused.com stated that 'in the last two years visibility of the market through price comparison sites has kept prices down and driven up competition.'

But recent figures show the largest price hikes are for drivers between 41 and 55 as they were forced to add their children to their policies.

Women in this age group were especially affected, seeing a 14% rise on top of the 14.2% rise seen across all other policies.

The rises also vary according to where you live, with drivers in Manchester and Merseyside seeing the largest quarterly increase of 18.2% and drivers in Bradford and Ilford, Essex seeing a hike of 20%.

With price comparison websites still forcing the industry to compete a little the prices are perhaps not as high as they could be, but as Lamble says 'this is a massive blow for motorists, and unfortunately we do not think we've seen the worst of it.'

Source: This is Money