According to the AA’s ‘British Insurance Premium Index’, which tracks the average quoted premium for 1,000 people up and down the UK, car insurance premiums rose faster over the second quarter of 2009 than they had for nearly a decade.

April to June premiums have risen 3.5% to £778, over 1% per quarter according to the index.

The Shoparound index, which is an average of the lowest three quotes for each customer in the ‘British Insurance Premium Index’ rose at an even faster rate of 4.4%, bringing this average to £526.

So why are car insurance rates rising so fast?

Simon Douglas, director of AA Insurance explains: “Car insurers are making heavy losses in no small part to the rising cost of dealing with accident damage; a growing number of fraudulent claims and continuing costs associated with accidents involving uninsured drivers.“

But the biggest contributor according to Douglas is the growing number of personal injury claims and the costs to insurers of dealing with these.

“In fact, personal injury claims and legal fees have become a major issue for car insurers and are one of the main causes of increasing premiums. Last year, the industry forked out a staggering £9.6 billion in personal injury claims, a rise of nearly £2 billion since 2006. And 40% of every payment made for personal injury is for legal costs.”

“Personal injury claim lawyers are up-front about the fact that if you make a no-win no-fee claim, their costs come from the third party’s insurance company. Those add to insurance company costs and contribute to the increased premiums that affect everyone.”

Douglas also makes the argument that cheap premiums found on price comparison websites are often achieved by cutting out benefits such as windscreen cover or legal expenses cover. This can often be the case and so if using a price comparison site like GoCompare.com or Confused.com it’s important to check that the policy you’re buying includes the cover you require.

When you get a quote with AA car insurance they compare a panel of insurers then present you with the cheapest option. AA stress that no matter which insurer is returned as cheapest, the benefits plus terms and conditions of the policy remain the same, and so you can be sure you’re getting the cheapest premium with a set level of cover.

Have the cost of your insurance risen recently? Let us know…