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Insurance premiums on the up

The trend for falling home insurance premiums has come to an end and the cost of insurance overall in is on the up, according to the AA. The insurer blames this summer's flooding for the three per cent rise in home insurance premiums - the largest single increase the AA has recorded - and also reports a two per cent increase in home insurance premiums. "We now see the result of that devastation reflected in premiums as insurers meet the cost of drying out and repairing homes as well as temporary re-housing of families while their homes were made habitable once again," said John Close, insurer relations director at AA Insurance."Some predictions that premiums would rise by 15 per cent were overly pessimistic and, although I believe premiums will continue to rise as insurers dip into their reserves, I expect competitive pressure will keep increases affordable," he added. Car insurance premiums, which started to rise back in the second quarter of 2006, show no sign of slackening, with an increase of 3.57 per cent taking the average quoted third party, fire and theft premium to £1,042.41 - its highest ever level.

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