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Motor insurance premiums hit record high

Motor insurance premiums have hit a record high having more than doubled in the past 14 years.

The average annual car insurance premium stands above £720 - £20 more than it did a year ago, according to the AA's quarterly British Insurance Premium Index. In 1994 when the AA began collating premiums the average cost was just £328 a year.

It is yet another blow for motorists already suffering from sky-high fuel prices and car tax hikes. And it is expected to get worse. The AA said premiums are likely to go higher because underwriters are still making losses. For every £100 premium paid underwriters are paying out £112, it added.

Hayley Parsons, Chief Executive of insurance comparison website Gocompare.com, said: "This will be the last thing consumers want to hear on top of inflation busting increases to energy bills, petrol and food prices.

The AA index shows that young drivers, who typically buy third party, fire and theft insurance and already pay the highest car insurance premiums, are hardest hit because they are the most likely to make a claim.

Since the last Index in March 2008, more than £45 has been piled on to the average premium they can expect to be quoted, which is now £884.

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