Car insurance costs could rise by up to 10%, says AA

Vehicles Image copyright PA
Image caption Comprehensive car insurance costs at least £500 a year, the survey found

The cost of car insurance could rise by up to 10% in the coming year, and home insurance premiums are unlikely to go any lower, according to the AA.

The latest index of the cheapest deals on the market showed that the cost of annual comprehensive car insurance had risen by 0.2% to £540 in the final three months of 2014.

But the total was still £200 cheaper than the peak in 2011, the AA said.

It predicted rising motor insurance bills during 2015.

"Car insurance is extremely competitive. Nevertheless the underlying trend is upward," said Janet Connor, managing director of AA Insurance.

The AA Insurance Shoparound survey takes an average premium for a standard set of risks from the five cheapest quotes from insurers and price comparison websites.

This showed that the cheapest quoted comprehensive annual motor insurance rose in price in the second half of 2014 following three years of falls.

The cheapest buildings and contents insurance premiums were little changed in the final three months of 2014, the AA added.

It said that, barring significant weather damage claims over the winter, it expected premiums to remain static.

The figures comes as the Association of British Insurers began a campaign aimed at raising the issue of long-term flood defence investment.

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