AA warns of car insurance rise

Motoring group the AA has warned that the cost of car insurance is going to rise over the course of the year.

The warning comes in spite of the news that the cost of annual comprehensive car insurance experienced a 1% dip to £530.47 in the latest quarter. In comparison to the same time last year, car insurance has fallen in value by 5.8%.

However, the AA said premiums rose for drivers aged 60 and over and expects price hikes to be a trend as whiplash and fraudulent claims put pressure on insurance firms.

"We are starting to see insurers quoting higher prices," said Janet Connor, managing director of AA Insurance.

"I think that is the beginning of a trend, but the market remains very competitive. The rate of increase is not going to be turbo-charged."

The average price of home insurance has dropped by 9.6% over the last 12 months, which was in part down to a modest winter.

Conor explains: "Home premiums are most likely to be affected by extremes of weather and the recent winter has on the whole been notable for its lack of heavy rain, snow, winds and extreme temperatures."