Car insurance premiums soared by nearly 20% during 2009 as the UK's growing compensation culture pushed up insurers' costs, research shows today.
However, you can help limit the damage by following the MoneySavingExpert.com insurance cost-cutting system (details below).
The record cheapest car insurance quote we've seen is 96p, while one MoneySaver was PAID £67.50 to take out home insurance (see the Cheap Car Insurance and Home Insurance guides).
Car insurance costs up
The cost of comprehensive motor insurance jumped by a record 18.7% during the year, rising by 7.2% in the final quarter, to leave average premiums at just over £1,000, says AA Insurance.
It says a sharp rise in personal injury claims, with people now pursuing compensation even for minor injuries, has a big influence in the increases.
Rises in the cost of insurance have been even steeper for people taking out third party, fire and theft cover, typically taken out by younger drivers, with premiums for this soaring by 24% during the past year to average £1,252.
There has also been a 23% jump in the AA's shop around index, made up of the average of the three cheapest quotes available, for comprehensive cover, and a 33% rise for third party fire and theft cover.
Home insurance up
There was also a steep increase in the cost of home contents and buildings insurance, with premiums rising by 11% and 8% respectively during the past year.
But despite the rise, the average cost of home contents insurance is only slightly higher now than it was in 1994, when the index was first launched, at £113, compared with £105.
Slash insurance costs
You can help limit the damage by following our car and home insurance system. Sometimes, the cashback you get is more than the cost of the cover, which can put you in profit.
Here's how it works:
Step 1: Combine the power of comparison sites. These zip your details to a host of insurers' and brokers' websites in seconds, scraping their data to report back the cheapest. No site lists every provider so the key is combining searches to give yourself the widest range in the least time to find the cheapest policy of those that contain your required cover (see the Cheap Car Insurance and Home Insurance guides for full details).
Also note Aviva and Direct Line do not appear on comparison sites so, if you've time, search their sites to add to your comparison.
Step 2: Grab cashback. Once you know the cheapest provider, check whether you can grab any money back via a cashback website. These pay a cut of their commission if you click through to insurers' or brokers' sites via them (see the Top Cashback Sites guide).
Step 3: Remember next year. Just because you got a super-cheap quote this year, doesn't mean you will next year. So diarise a note six weeks before renewal so you don't up paying your insurer's expensive renewal price.
Comparison sites not for everyone
If you have a medical condition, have a high claims history, if you are sharing a home with friends, or if you have any other complex issues, comparison sites may not offer the cheapest policies.
If you can't find a decent quote, use a broker. You can normally find one via the British Insurance Brokers' Association (Biba) website (link below).
Additional reporting by the Press Association.
Further reading/Key links
Cut costs: Car Insurance, Home Insurance
Find a broker: Biba