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Last Updated: Thursday, 31 August 2006, 16:56 GMT 17:56 UK
Insurance pain for motorists
Sid James in BBC drama 'Taxi'
Insurance premiums have risen considerably since the 1960s
Norwich Union, the company which claims it will quote you happy, is increasing premiums by 40% for some young drivers.

Worst hit will be younger men, but the majority of all customers will see their annual payments rise.

The company says it has been forced to impose the increases because the premiums they are collecting do not cover the cost of repairing damage and compensating people for injuries.

The insurance industry complains that uninsured drivers are a worsening problem.

Compensation

In 2005 payments by the Motor Insurers' Bureau (MIB), which compensates other road users in the event of an accident with an uninsured driver, totalled 320 million.

The MIB scheme is funded by a compulsory levy on car insurance premiums, which currently adds around 30 to the average comprehensive premium of 750.

Fraudulent claims and in particular, staged accidents are another source of rising costs, adding around 40 to premiums.

Staged accidents are when gangs sandwich an innocent driver between two cars, making it seem as though he or she is at fault.

Personal injury

Personal injury claims are also added to insurers' costs, with the average claim doubling to 2,800 in the last five years.

Watch Simon's full report, which also contains some useful information to help young drivers reduce their insurance costs.

VIDEO: Insurance Increase




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