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Car insurance premiums "reach all-time high"

Premiums for motor insurance policies have recently risen to their highest ever level, while the cost of home insurance has fallen, it has emerged.

According to the AA's British Insurance Premium Index, the average premium for an annual comprehensive car insurance policy rose by 2.5 per cent over the last quarter and is now more than £822.

The index, which is viewed as a benchmark publication in the industry, also reported that both home buildings and contents premiums fell slightly in recent months, with the cost of the average buildings policy dropping by nearly two per cent.

Managing director of AA Insurance Kevin Sinclair commented: "There is still a large gap between premium income and the cost of claims so I'm not surprised to see the generally upward trend of the previous year resuming."

Car purchases were recently revealed as the most popular reason for personal loan applications, although young drivers who are now struggling to insure their vehicles may need to use a loan to cover the cost of their premiums.

Research by Alliance and Leicester Personal Loans found that 25 per cent of Britons have taken out a loan to pay for a used car.

See how much you could borrow with a motor loan from Lombard Direct .

03/07/2007 17:27:13

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