Car cover set to rise by 15pc

MOTORISTS could see a £75 rise in premiums this year as tax rises, compensation changes and the pound’s fall hit home.

David Stevens, boss of car insurer Admiral, said that the youngest and oldest drivers would be hit hardest by state tinkering and sterling’s fall.

He said the average motorist could expect a premium rise of 15pc or around £75 – meaning policy costs will have soared by a quarter in just two years.

It came as Admiral reported a 24pc fall in profits to £278.4m. This was largely due to a change in the way compensation payments are calculated for victims of serious accidents, which cost the firm more than £100m.

The changes mean that seriously injured people will get much higher payouts, but insurers must stump up the cash and are likely to fund it through higher charges for drivers.

The industry is also suffering from repeated hikes to insurance premium tax, which is set to rise again this summer.

And there has been a surge in the cost of imported car parts. Stevens said Admiral had already increased premiums in December ahead of the compensation changes but there would be more, smaller rises in coming weeks. He added: ‘There will be parts of the market which see much bigger increases, for young drivers and the over-75s.’

Despite the difficulties, Admiral grew its customer numbers by 16pc to 5.2m. And it held its dividend steady at 114.4p per share. The stock rose 1.7pc, or 30p, to 1829p yesterday.