Car insurance premiums will continue to rise towards the end of the year, a new report claims.

The AA's British Insurance Premium Index states that 1.35 per cent rise in average quoted premiums was recorded over the second quarter of 2007, reaching a total of £833.56.

An "upward trend" was first noted in the second quarter of 2006, and this will continue at least until the end of the year, the AA says. Car insurance providers were hit by this summer's flooding, which cost them around £100 million. Therefore a rise in premiums is not a surprise, according to AA insurer relations director John Close.

"The cost to the industry of personal injury claims and legal costs has been escalating rapidly, while accident damage costs has also risen faster than premiums," he said.

Other recently-released insurance indexes have stated that car insurance premiums rose by a reasonably steep 2.1 per cent during 2006. Under 25s have experienced the steepest rises, with premiums cheaper for women than for men.

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