Car insurance costs reach all-time high

By Jennifer Hill

LONDON (Reuters) - Car insurance premiums have reached an all-time high, more than doubling over the past 13 years, figures show.

Comprehensive premiums have risen by almost 8 percent in the past 12 months, despite a slight dip in the first quarter of 2007, according to AA's benchmark British insurance premium index.

They went up 2.5 percent in the second quarter of this year to an average 822 pounds -- more than twice that in July 1994, when the AA index was first published.

Third party, fire and theft car insurance is also on the up.

It increased by 1.32 percent in the past quarter to its highest-ever index average of 1,006 pounds.

This kind of cover is typically bought by young, inexperienced drivers with little no-claims bonus and premiums reflect this.

Kevin Sinclair, managing director of AA Insurance, said: "There is still a large gap between premium income and the cost of claims so I'm not surprised to see the generally upward trend of the previous year resuming.

"I think this trend is likely to continue," he added.