Conflicting car insurance reports released

Recent figures produced by the insurance comparison website, www.insurancewide.com suggest that car insurance premiums have fallen by some 4.6% during the second quarter of 2007. However, these findings are in contrast to data released by the AA, which indicates a rise of 2.5% on insurance premiums.

It is likely that differences in methods used to calculate insurance premiums are responsible for this apparent anomaly. The insurancewide.com surveys include data gathered from direct insurers such as www.swiftcover.com and Its4Me, organisations excluded by the AA's report. According to the AA's benchmark British Insurance Index, premiums on car insurance have risen by over 8% since December 2006 whilst the cost of non-comprehensive insurance policies usually taken out by drivers with little experience rose by 1.62%.

But what are the implications of these apparent contradictions for the finances of the consumer? If the cost of car insurance is on the increase when measured after direct insurers are excluded, but is on the decrease when measured when these insurers are included, then it would appear that direct insurers offer consumers cheaper policies compared to other insurance providers. Average prices calculated when direct insurers are included are over three hundred pounds cheaper compared to when these providers are excluded. As such direct insurers offer some of the most competitive insurance deals on the market.

Insurance markets tend to be very fragmented – cover levels and benefits received vary widely between providers. Furthermore, given the wide difference in insurance costs between providers, it is essential to do as much as you can as the consumer to keep payments at a minimum. There are also a number of steps you can take to make sure this is the case.

• Ensure that the number of convictions associated with your license are at a minimum. For example, frequent fines for speeding are likely to significantly increase your insurance costs.
• Altering the design of your car or inserting additional features could raise your insurance premium. Check with your provider before undertaking such changes.
• Learner drivers can reduce their premiums by taking courses in driving skills and safety and thereby demonstrating their proficiency in the area. One such course is offered by Pass Plus. It has helped drivers reduce their premiums by some 30%. For further information, go to passplus.org.uk.
• It is essential to ensure that you always park your car in a safe manner. Failing to do so could make your vehicle more susceptible to accident or theft and thus raise insurance costs. For instance, it might be wiser to park your car in a garage overnight rather than out on the street.

Still confused over your car insurance premiums? Don't want to fall victim to rising costs when cheaper alternatives are quite clearly available? Don't worry – help is available: two useful sources of information when it comes to price comparisons are the consumer magazine, Which? and moneysupermarket.com. These publications can provide you with impartial advice and support.

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