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Car insurance premiums 'up by 40%'

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There has been a 40% rise in car insurance premiums over the last year as the high number of fraud and personal injury claims forces up the cost of cover, a study has revealed.

The AA said that at the end of March the price of a comprehensive policy was £892, based on an average taken from three of the most competitive quotes that could be found.

This figure is 40.1% higher than the average amount from the same period in 2010, and is the biggest yearly increase that has been noted by the AA since it began its index in 1994.

Younger drivers have seen their premiums go up the most, with comprehensive car insurance for people aged between 17 and 22 at an average £2,431, a 64% rise from the previous year.

For men in that age group, the cost of premiums was a lot higher, at £3,052.

The biggest hike was to third party, fire and theft cover - policies that are often taken out by young drivers who cannot afford comprehensive cover - with premiums soaring by 82.1% to £1,533 as insurers continue to exit the sector, reducing competition.

The AA said the main factors pushing up the cost of motor insurance continued to be high levels of fraud and expensive personal injury claims.

The group said despite the number of collisions on UK roads falling, the number of claims for whiplash injuries continued to rise, with more than 200 claims submitted a day, often for accidents that happened up to three years ago, when no mention of injuries was made at the time.

But it added that recent proposals by Lord Chancellor Kenneth Clarke to curb the costs associated with "no-win, no-fee" claims should help to improve the situation if they become law.

© Press Association 2011