New research by the AA has shown that car insurance premiums fell unexpectedly in the first quarter of this year. The company warned, however, that insurance premiums could start to rise again soon due to increased overhead costs for insurers.

The study by the AA revealed that the average cost of a comprehensive car insurance policy fell by 3.3 per cent between January and March, to £968. This was an unexpected fall as premiums had risen by a record 18.7 per cent in 2009.

Simon Douglas, a director at AA insurance, commented: "Last year, for the first time, premiums rose during the first quarter and I expected the same to happen this year.

The motoring company said that the lull in prices was likely to be a temporary reprieve only and predicted another double-digit increase in premium costs this year.

Mr Douglas said: “The same pressures as last year continue to force insurers to increase premiums: fraud and personal injury claims especially remain a significant concern.”

Despite the fall in premium prices in the first quarter, comprehensive insurance cover still costs 13.4 per cent more than it did a year ago, and the AA’s shoparound index has risen by 22.5 per cent for comprehensive cover and by 35.6 per cent for third party, fire and theft cover.

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