New research shows that features that used to be standard in virtually all comprehensive insurance, such as third-party liability cover for driving any vehicle, or an extension of cover for short trips overseas, are disappearing.

Courtesy cars and recovery of any uninsured losses when motorists are at fault are becoming costly and many view them as optional extras. According to an exclusive analysis for Financial Mail conducted by the British Insurance Brokers' Association, there was significant evidence of cover being eroded.

Soaring insurance costs are the latest blow for hard-pressed motorists. A recent analysis by management consultant Deloitte shows that premiums have risen by 8.2% in the past 12 months to £488 a year on average.

Catherine Barton (left), insurance partner at Deloitte, says: “This is the biggest annual rise in premiums we have seen in a long time. Insurers have been releasing money from reserves over the past few years to keep competitive, but this is drying up and premiums are having to rise.”

Only recently, Norwich Union announced that it was suspending its pioneer Pay As You Drive insurance policy less than two years after it was launched.

The policy used global positioning system (GPS) technology to track people’s car usage through a black box installed in their vehicle. Motorists are then charged a rate starting at around 0.25p a mile depending on the time of day and the type of road they are using and how long their journey is.

The policy also meant that drivers were charged higher rates for journeys made at times that they were more likely to have an accident, such as during the rush hour and late at night. The Pay As You Drive scheme led to savings for people with low car usage or young drivers, who typically face very high insurance costs, with Norwich Union saying people involved in its pilot of the product saved up to 30%.

But car insurer More Than insists that despite the rising costs of insurance, the company will continue fitting satellite trackers in customers' vehicles, despite rival Norwich Union abandoning a similar scheme. More Than’s ‘drive time’ package, aimed at young drivers, uses a tracker to monitor if a car is driven after 11pm.

This is when risks of an accident are highest. Basic premiums are low, but a £25 fee is charged for each night drive. Last month More Than also launched a Green Wheels policy that allows customers to monitor their motoring through a personal 'green box' car tracker.

Recent reports have suggested that Brits are paying more for their car insurance premiums because they simply hand the cash over on a monthly basis. Already rocketing fuel costs is likely to push more people into telematics-based insurance products.

At the same time, insurance policies that reward careful drivers with lower bills could become popular among motorists as higher fuel costs force drivers to change their driving behaviour. Insurance company More Than has recently launched Green Wheels, a policy that allows drivers to access reports analysing their driving style on 'eco-driving' criteria.

Royal & SunAlliance-owned More Than is now the only insurer that offers a telematics-based service, after Norwich Union dropped its Pay As You Drive policy following a lower-than expected take up.