Car insurance prices fell over the last three months, while home insurance premiums rose, research by the AA has found.

Over the three months up to 30 September, the average cost of a comprehensive car insurance policy fell by 2.9% to £845, although prices rose 5.6% over the year.

Key Points

  • Car insurance prices fell over the last three months
  • But home insurance prices rose, says the AA
  • Insurers can't use gender to set prices from 21 December

In contrast, the cost of home insurance rose over the third quarter of the year, with a combined buildings and contents policy rising by 1% to £242. There was an annual increase of 7.2%.

The AA calculated its findings using its Shoparound Index, an average of the five cheapest quotes for each insurance type in a nationwide sample of risks.

Car insurance falls

According to the Shoparound Index, the cost of car insurance from a comparison site, as opposed to going directly to the insurer, also fell by 1% to £613 over the three months. Across the year, it was a drop of 2.3%.

It can be cheaper for most to search for a policy using a price comparison site. See our Cheap Car Insurance guide for more details.

The cost of getting third party fire and theft cover also fell, with average premiums bought direct costing £1,162 – down 1.8% over three months. Premiums bought from a comparison site cost £830 on average, down 1.6% over three months.

However, costs rose over the year, by 3.9% when bought direct and 3.4% via comparison sites.

Premiums for young drivers aged 17-22 have also fallen slightly. Over the third quarter, young men saw their premiums fall by 0.7% to £1,603, while prices for young women dropped 2.2% to £1,127. 

However from 21 December, a European Court of Justice ruling means insurers will no longer be able to use gender as a means of calculating insurance premiums and the AA says this could add 25% to young female drivers' premiums.  

Simon Douglas, director of AA Insurance says: "Just weeks from the ECJ gender change directive deadline, young female drivers are paying on average £500 less for their cover. 

"For new drivers, my advice to young women would be to buy their insurance as soon as they can, while young men might be advised to wait until the new year, since their premiums are likely to fall further."

Home insurance rises

Unlike car insurance costs, home insurance policies have risen over the three months to the end of September.

Buildings cover rose 2.4% to £181, while contents cover rose 0.8% to £93. Over the year, costs rose by 5.2% and 3.3% respectively.

The AA blames a washout summer and flooding for the rise in premiums, which according to the Association of British Insurers, cost insurers around £400 million in damage claims.

In contrast, research from comparison site MoneySupermarket claims the cost of the average combined building and contents policy fell by 8.4% to £163 in the year to the end of August. It also found the cost of contents cover decreased by 14.8% to £79, and the price of buildings cover fell by 2.6% to £113.

How to slash insurance prices

There are ways to cut your insurance costs - here's what you can do:

Step 1: Use price comparison sites. These utilise a host of insurers' and brokers' websites to find you the cheapest deal based on what you require. No site lists every provider, so the key is to combine searches to give yourself the widest range. See our Cheap Car Insurance and Cheap Home Insurance guides for more detail.

Also note Aviva and Direct Line don't 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.

Step 3: Remember next year. Just because you got a cheap quote this year, doesn't mean you will next year. Diarise a note six weeks before your renewal so you don't end up paying your insurer's expensive renewal price.

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.