Insurance companies have raised car insurance premiums by 5.8% from last year following a dramatic increase in the cost of claims, according to a study.

The new research by Sainsbury’s car insurance index revealed that car insurance premium now averages at £514.36, the first time it has exceeded £500 since the measure was launched in 2005.

Joanne Mallon, Sainsbury’s car insurance manager, said: "There are a number of factors leading to higher premiums, including a rise in the cost of personal injury claims and also repairs."

Additionally, the index shows significant differences in premium increases based on age in the last 12 months.

According to the report, drivers aged over 65 saw an average rise of 10%, the highest of any age group. At the same time motorists aged under 25 who typically pay the most saw their premiums rise by just by 2.47% since July 2007. This was the lowest of any age group.

The study further revealed that men continue to pay more for their car insurance than women on average - £540.49 compared with £470.47.

Ms Mallon said: "Given that car insurance premiums are rising and the cost of driving is now at its highest for a number of years, it is all the more important for motorists to shop around for competitive insurance."