MONEY COMMENT
How To Beat Rising Insurance Costs

By Cliff D'Arcy
January 20, 2004

According to the AA, Britain's biggest home and motor insurance broker, the cost of both car and home insurance rose again last quarter.

Since 1994, the AA's British Insurance Premium Index has tracked quarterly changes to home insurance premiums (500 risks each for buildings and contents) and on 500 car insurance risks (404 comprehensive and 96 non-comprehensive). This comes to 1,500 quotes, obtained from 51 car insurers and 39 home insurers.

Thanks to increased subsidence claims caused by last year's hot, dry summer, the cost of buildings insurance went up by around 0.7% last quarter, making the average premium almost £209. Winter storms and flooding are also putting pressure on premiums. Premiums for contents cover also rose, this time by 0.4% to £151.

One piece of good news for homeowners is that home insurance premiums have risen only slightly since 1994. Thanks to people ditching expensive policies provided by their mortgage lenders, home insurance premiums have remained competitive, especially for those prepared to shop around online.

On the other hand, car insurance premiums have been rising steadily over the long term, and have almost doubled since 1994. The typical premium for comprehensive cover is now £778, up 0.25% in the last quarter.

However, the AA's survey also quotes a 'Shoparound' premium, which is the average of the three lowest premiums found in its survey. Here's how it compares:

British Insurance Premium Index
Policy type	Shoparound premium (£)	Average premium (£)	Difference (£)	Difference (%)
Buildings	133.46	208.51	75.05	56
Contents	88.78	151.21	62.43	70
Comprehensive motor	495.33	777.57	282.24	57
Non-comprehensive motor	540.37	910.69	370.32	69

So, shopping around for buildings, contents and comprehensive motor insurance could save you around £420 a year, which is well worth having! Start by visiting our Insurance Centre and reading the articles below.

Home insurance:

• Beware The Rule Of Three
• Get Home Cover That Measures Up.

Car insurance:

• Terrific Tips For Motorists!
• Britain's Best Motor Insurers
• Making The Most Of Motor Insurance.

More: The Fool's Guide To Motor Insurance.