So wheres the problem?

* The average driver is paying 30% more * Why, and what's being done about it? * We expose the shocking truth...

So wheres the problem?

Rachael Sharrocks, of the Association of British Insurers (ABI), says vastly increased premiums are down to three main things: uninsured drivers (who add on average 30 a year to a motor insurance policy), fraudulent claims (41 a year) and legal fees incurred in settling personal injury claims (41 a year).

Its estimated that as many as one in 20 drivers is uninsured, but that shouldnt be a surprise when the fine for doing so is so much less than the cost of cover. Drivers caught without insurance will typically receive a fixed penalty notice of six points and a 200 fine, but young drivers with clean licences often pay more than 2000 for insurance.

Thats why new rules were introduced last month to crack down on the uninsured. King explains: The introduction of Continuous Insurance Enforcement will make it an offence to keep a car even on private land that is neither insured nor subject to a Statutory Off Road Notification (SORN).

How to stave off the price hikes
Shop around whenever your insurance comes up for renewal, not just when you change cars.
Dont only use price comparison sites, since not all insurers will be on them.
Fit extra security to your car (use Thatcham-approved products).
Consider a higher excess to cut your annual premium.
Men may pay less if a woman is a named driver on the policy.
Obey the law no points means lower premiums.
Dont pay by instalments, because this adds interest payments to the cost.DVLA and Motor Insurance Database statistics will be compared to identify those vehicles and could lead to prosecution of the keepers and confiscation of the vehicle.

The cost of uninsured drivers might be big, but the cost of insurance fraud is even bigger. Here, the law is also changing, E because insurers will soon be able to access DVLA records to check the details that drivers provide. Fibbing about your age, driving experience or the points on your licence? Youll be caught. This is welcome because it will not only identify attempted fraud but also genuine mistakes, says King.

Perhaps the most controversial cause of sky-rocketing premiums is the rise of personal loss and injury claims. ABI figures show that the cost of such claims, plus the cost of hiring replacement cars, has doubled in the past 10 years, and that the number of injury claims actually outstrips the number of accidents, which cant be right.

Solicitor Kevin Bolton, a specialist in personal injury, refutes suggestions that the courts are awash with fraudulent compensation claims. He says: 99.9% of people are genuine claimants. The idea that Britain now has an American-style compensation culture is greatly exaggerated, he says. Whats happened is that people have become more aware of their rights. The rules are very strict, and claimants have to jump over many hurdles to prove their case.

The Transport Select Committee, made up of MPs, disagrees, and has called on insurers to do more to deal with fraudulent claims. It also wants a dedicated police unit to be set up to tackle the problem and for it to be paid for by the insurance industry.

The growing problem of accidents being staged so that fraudsters can claim for compensation has also been highlighted. Committee chairman Louise Ellman said: So far, we have been lucky that there have been no fatalities resulting from such incidents. Action is likely, but the course of that action is undecided.

Women set to pay 30% more
Women drivers generally pay less for their insurance than men, as statistics show them to be a lower risk. Fair enough? Not according to the European Court of Justice (ECJ). It has ruled that insurers can no longer charge different premiums for men and women based on their gender.

When the ruling comes into force on December 21, 2012, the AA predicts the cost of car insurance for women will go up by 25-30%. Premiums for men are likely to fall by around 10%. Young female drivers are likely to be hit especially hard. The AA predicts young women could see their premium go up by around 400.