It has been revealed that car insurance premiums have skidded into its highest rates in a decade.

Car policies have revved up by 11% over the past year and are speeding up by 1% a month, according to the AA British Insurance Premium Index.

The latest figures from the group showed that car insurance costs have jumped by 3.5% over the past three months and 11% over the past year.

As a result, the organisation said that premiums are rising at their fastest rate for nearly a decade. It discovered that the average quoted premium for third party, fire and theft insurance, normally purchased by inexperienced and young drivers, increased by 4.6% over the quarter to £968.22.

The average premium for comprehensive car cover shot up by 3.5% to £778.13 between April and June.

Personal injuries causing claims rise

The AA noted that personal injury claims, theft and fraud were to blame for the sudden rise. Personal injury claims and their linked legal expenses are expected to hike up to £10.9 billion by 2012.

Whiplash injury and whiplash claims alone represent around £66 for every car insurance policy sold to motorists.

The AA said that the trend is reinforced in the 2009 Motor Insurance report, which pointed out that large premium increases would be necessary to for underwriters and insurers to recoup profits.

Simon Douglas, director of the insurance group stated that the rise is something to worry about: "The fact remains that underlying premiums are rising more steeply than they have since 2000 because of rising costs.

"There's no getting away from the fact that the industry continues to suffer underwriting losses, which are predicted to be in excess of £240 million this year."

He added: "Customers are being tempted by cheaper quotes that offer lower levels of cover with high excesses so it is really important that they talk to their insurer to make sure that the cover meets their needs before they buy."

He concluded: "I don't see the pressure on premiums easing. Over the past three months more than 90 per cent of quotes in the AA Index added £5 or more to their premiums and only 2 per cent fell. During the previous quarter, 20 per cent had reduced their premiums."

Putting the brakes on speeding claims

Unfortunately, the Index suggested that young drivers will once again have to burden the premium increase.

There is a rising number of insurers who are withdrawing third-party cover and only half will quote for drivers aged under 21, who make 10 times more claims than drivers aged 35.

As a result, insurers have advised young drivers to take tests to prove they are responsible and serious about road safety.

They advised young people to think about doing the Pass Plus course, which can reduce premiums, add mum to the policy and choose a low power car that's cheap to repair.

Ian Crowder, of the AA, says there are ways to lower premiums: "One obvious step is to go for a car that has a low insurance rating. The Parker’s website has a list of cars that fall into Group 1 — the lowest and cheapest insurance category."

The AA has also urged insurers to help young motorists drive safely on the roads with more accessible insurance, instead of shining the red light on them.