Car insurance costs have dropped by record levels over the past year, while home insurance costs are also down, the AA says.
The average quote for annual comprehensive car insurance has plunged to £594.86 – a 9.8% fall from last year's figure of £659.53, and the biggest decrease since the AA insurance index began in 1994 (see our Cheap Car Insurance guide for tips on cutting costs).
The figure for third party, fire and theft insurance has also dipped in the last 12 months, going down 4.8% to £820.58. The AA's figures are based on the five cheapest premiums from direct providers, brokers and price comparison sites,
Comparing July 2013 figures with those from April, it says comprehensive insurance has fallen 3% and third-party insurance is down 2.2%.
Over the last 12 months, car insurance costs have fallen for all age groups, with those aged 23-29 enjoying the biggest decreases. Their average costs have gone down by 12.8%, to £738.93.
All age groups have seen 12-month falls of at least 5.4% except those aged 70 or above, who have had to settle for a 3.9% fall in premiums.
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On average, those aged 60-69 have the cheapest annual insurance at £342.73, while 17-22 year-olds have the most expensive at £1,210.54.
AA Insurance director Simon Douglas says: "Insurers were facing a fast-widening gap between premium income and claims costs, largely driven by whiplash injury claims and fraud, which saw very sharp premium increases between 2009 and 2011.
"That gap is closing and premiums are falling again thanks to competition, as well as improved fraud detection by the insurance industry and tightening of the law that is beginning to curb the number of spurious new whiplash injury claims."
Home insurance down too
The average premium for a combined buildings and contents policy, also based on the five cheapest premiums from direct providers, brokers and price comparison sites, fell by 5.8% over the year to £175.78 (see our Home Insurance guide to slash costs).
A standalone buildings policy dropped by 5% over the year to £130.45, while a standalone contents policy fell by 3.8% to £70.72.
Comparing July 2013 figures with those from April, the AA says buildings insurance has fallen 2.6%, contents insurance has fallen 2.1% and a combined policy is down 2.5%.
But the AA's Douglas says he fears a deal between the Government and the insurance industry on flood cover could affect all home policies (see the Flood-risk homes to be helped by insurance cap MSE News story).
He explains: "If there is a major flood disaster soon after the agreement is finalised that will lead to a sharp rise in home premiums, as happened after the 2007 disaster."
Additional reporting by Michael Connolly.