MOTORISTS are benefiting from cheaper insurance costs as well as lower petrol prices after a survey showed premiums are down by ten per cent on a year ago.

The AA’s British Insurance Premium Index said the average quoted car insurance premium was £540.26 in the final three months of last year, little changed on the previous quarter, but sharply lower than 12 months earlier.

Prices have fallen in the last three years due to a crackdown on fake whiplash claims and inflated hire car and repair bills that padded out premiums.

However, the AA warned that current prices may be as good as it gets for motorists as the underlying trend appears to be upward.

Janet Connor, managing director of AA Insurance, said: “Some insurers may have lost business by increasing premiums, leading to a ‘year-end sale’ to boost market share, so car insurance is still very good value.”

But she added: “Nevertheless the underlying trend is upward, although I think premiums will struggle to rise past ten per cent by the end of the year.”