Home and car insurance continue to rise, says AA

Home insurance policies rose by 5.6% over 2011 while the cost of covering a car increased 15.3%

Research from the AA found home and car insurance costs rose over 2011 with car insurance costs jumping 15.3% in 2011 and 5.4% in just the last three months.

The price of contents and buildings insurance also rose with an annual increase of 9.5% for buildings and 11.2% for contents insurance. Combined premiums increased 5.6% over the year.

Increasingly frequent severe weather pushed up home premiums while economic pressures resulted in more thefts.

"Storm damage, flooding and burst pipes are top of insurers' list of worries, following two harsh winters," said director of AA Insurance Simon Douglas.

Economic pressures resulted in increased theft claims, said the AA. The British Crime Survey showed domestic burglary in England and Wales grew by 10% over the 12 months to the end of June 2011.

Car insurance continued to rise over the fourth quarter of 2011 after a brief dip. Young drivers were particularly hard hit with figures showing premiums for men under 22 rose by 15% on the year to £3,163. 

Douglas also cautioned that young women will face the biggest increase in premiums following last year's European Court of Justice ruling that using gender to set insurance premiums is discriminatory.

Insurers will no longer be able to take gender into account from December 2012.

"It is unknown territory for insurers who will be careful to avoid significant losses they can ill afford," Douglas said.