The cost of car insurance policies could rise by up to 25% in 2016, according to the AA, after 20% rises in 2015. But there are ways to lock in a cheap price now, even if you're not at renewal.

New figures from the AA's British Insurance Premium Index show the average cost of a comprehensive annual policy rose by more than £100 in 2015. In the final three months of 2015 the average comprehensive policy cost £625.70, up 20% compared with the last quarter of 2014.

The steepest rise came at the end of 2015, with the typical cost of comprehensive cover jumping by 10% in the last three months compared with the previous quarter. The AA says that's the biggest quarterly jump it's seen since 2010.

As a result, the motoring organisation is predicting a massive rise in prices this year, with the cost of cover potentially increasing by up to 25%.

Check your cover now to beat the hikes

Car insurance is a grudge purchase – we've got no choice. Many leave it until renewal, but with prices predicted to rise steeply again this year, everyone should check now. See full info in our Cheap Car Insurance guide, but in brief:

  • If your renewal's due within 60 days. Some firms' quotes are valid for 60 days, so if prices rise you're covered. These include Aviva*, Nationwide and LV* (see 20 long quote insurers for more). You can get quotes now, then find the cheapest insurance by following the steps below.
  • If you're mid-policy. Firstly, use the info below to find your cheapest insurance. If it's much cheaper than it is now and you haven't claimed, for an admin fee of about £50 you can usually cancel your policy and get the rest of the year refunded (but you won't earn the year's no-claims bonus), locking in today's price. See full switching mid-policy info.

Car insurance prices 'to soar by 25% this year' – check yours now
Car insurance prices 'to soar by 25% this year' – check yours now

How to find the cheapest car insurance

For full help, check out our Cheap Car Insurance and Young Drivers' Insurance guides, but here are the basics:

Why are costs rising?

The AA puts the rising cost of motor insurance partly down to a tax hike imposed last year (see the Insurance premiums soar for millions MSE news story). The standard rate of Insurance Premium Tax – the tax paid each time an insurance policy is purchased in the UK – increased from 6% to 9.5% on 1 November 2015, as announced in the Summer Budget.

Michael Lloyd, director of AA Insurance, says personal injury claims – particularly those for whiplash – also continue to "haunt" the industry. It's estimated false and exaggerated claims add around £50 to the cost of every policy.

Research by AA Insurance last year suggested 11% of drivers thought it acceptable to make an insurance claim for an injury following a collision, even if none was suffered.

Mr Lloyd said: "The sooner new legislation to tackle whiplash claims becomes enshrined in law, the sooner that will be reflected in the premiums quoted for car insurance."