CAR INSURANCE COSTS SOAR £90 IN A YEAR

Car insurance costs have risen at five times the rate of inflation in the last year, landing the average driver with a £90 jump in their premium.

The average annual bill now stands at an unholy £666 across the UK, although young drivers are paying dramatically more than this.

The latest data from industry observers Consumer Intelligence shows that premiums have risen by 15.7 percent in the last 12 months, compared with the Consumer Prices Index of 2.9 per cent.

Scottish drivers still pay the lowest premiums in Britain – at an avearge of £474 a year – but last year were hit with a higher-than-average price rise of 16.6 per cent.

John Blevins, Consumer Intelligence’s pricing expert said the increase was down to recent changes in the law around compensation payments, which have seen insurers pass increased costs onto customers.

The “Ogden rate” saw the discount insurers could apply to payouts for serious long-term injuries reduced from 2.5 per cent to -0.75 per cent.

Blevins commented: “Price rises had been levelling off at the end of last year but are now rising rapidly as the full impact of the discount rate cut comes into effect.

“Government plans to review the Ogden rate have so far taken a backseat following the election although there is some relief from plans to push ahead with whiplash reforms announced in the Queen’s Speech.

“However with the impact of the latest Insurance Premium Tax [IPT] rise still to come into effect drivers need to shop around to limit increases in premiums.”

IPT, which affects all drivers, has risen three times in the last two years, with the latest rise – from 10 to 12 per cent –taking effect earlier this month.

The latest figures show that premiums for drivers aged between 21 and 24 actually rose less than average (13.1 per cent) but they still pay the highest prices, at an average £1,202. Over-50s motorists experiencedthe biggest rise sat 17.9 per cent but paid premiums of £418.

Motorists in London pay the country’s highest average premiums at £1,000 across Britain with the north-west of England close behind at £867.