Shopping around can save drivers and homeowners up to 45% on their insurance

Car premiums soar but cost of home cover falls 

MOTOR-INSURANCE premiums are soaring across the country, according to the AA Insurance Premium index. But the cost of home-contents and buildings policies is falling. 

The index, which is used to track premiums, finds quotes from 39 insurers for 50 fictitious people across the country. Since 1994, the average car-insurance premium has increased by about 20%, or £71 - although for a 25-year-old shop assistant from Bournemouth the cost of insuring her Vauxhall Cavalier will have escalated by 51% from £436 to £661. 

Secretaries in Manchester, housewives in Rugby, nurses in Derbyshire and toolmakers from Cambridge have also been singled out for big premium increases by insurers. All have suffered an average premium increase of about a third. 

However, by shopping around, motorists can save an average of almost 40% on the cost of their premiums. The higher the premium, the more you can typically save - more than 50% in some cases. 

Rebecca Hadley, a spokeswoman for the AA, says: "Motor insurers have had to raise their premiums over the past few years because they were losing money, but most people can still cut the cost of motor insurance by going elsewhere. Insurers are also becoming more selective about who they will insure, a process that is known as cherry picking, and higher-risk drivers are finding it more difficult and more expensive to get cover." 

However, while motor insurers have raised premiums and restricted cover to fewer people, the cost of many home-insurance premiums has fallen. Since 1994, the price of a typical contents policy has dropped by 10%, while the average buildings policy has fallen by 6%. 

Experts believe that the fall reflects the growing awareness among homeowners that their mortgage lender does not always offer them the cheapest policy. 

But the index reveals that further savings can be made. For example, a retired person from Ely, Cambridgeshire, could save 45%, or £130, on the cost of the average buildings-insurance bill.