Car insurance costs in the UK are rising at a level that outpaces inflation, according to recent research conducted by confused.com.

The price comparison site worked together with Towers Watson to compile the Car Insurance Price Index, which revealed that an average policy in the UK now costs £844.

However, it also confirmed that prices are not rising steadily across the country. In fact, there is a substantial difference between the fastest and slowest paces of growth. In Bradford, for example, car insurance costs rose by 17.1 per cent in 2011, while in Bolton they were up just 11.7 per cent.

Meanwhile, other areas saw declines in costs last year, with Falkirk in the lead with a drop of 4.6 per cent.

But overall, the cost of comprehensive cover rose by 4.9 per cent, while third party, fire and theft premiums rose by 10.2 per cent year-on-year.

Gareth Kloet, head of car insurance for confused.com, commented: “In 2012 we can expect to see new factors affecting car insurance prices such as the introduction of the EU legislation on gender due at the end of this year meaning that insurance cannot be priced according to gender.

“We will also see new technologies affecting car insurance prices such as black box technology which allows insurers to offer discounts to drivers who can prove that they are careful behind the wheel.”

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